Cost of Prejudice in the Digital Labor Market

This study examines whether Black employers must offer higher compensation to attract the same labor supply and sustain equivalent production as White employers. We implement a randomized evaluation in a realistic digital labor market environment, where workers complete real-effort receipt-transcription tasks for pay. Employer race is signaled through images of dark-skinned and light-skinned hands holding gasoline receipts, and workers respond to a Multiple Price List (MPL) reservation-wage design embedded within the labor-market interface. Using workers’ acceptance decisions and subsequent production behavior, we estimate compensating wage differentials, employer-specific labor supply curves, and the employer-side cost of prejudice. The findings contribute to the literature on labor-market discrimination by quantifying the employer-side cost of prejudice faced by Black employers and may inform discussions about wage subsidies and platform design intended to improve equity in digital labor markets.