Customer discrimination: Evidence from Israel

Revital Bar, Asaf Zussman*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


This paper studies customer discrimination against Arab workers in the Israeli market for labor-intensive services. Relying on surveys, field data, and a natural experiment, we provide evidence consistent withBecker’scustomer discriminationmodel.First,asignificant share of Jewish customers prefer to receive labor-intensive services from firms employing Jewish rather than Arab workers; these preferences are most strongly linked to concerns for personal safety. Second, customer preferences affect firms’ hiring decisions. Third, firms employing Arab workers charge significantly lower service prices than those employing only Jewish workers.

Original languageAmerican English
Pages (from-to)1031-1059
Number of pages29
JournalJournal of Labor Economics
Issue number4
StatePublished - Oct 2017

Bibliographical note

Funding Information:
For valuable comments and suggestions, we thank Joseph Altonji, David Neu-mark, and participants of presentations at the Bank of Israel, Ben Gurion University, Conference on Empirical Legal Studies in Europe (CELSE) 2016, Hebrew University (Economics and Psychology Departments), Israeli Centers for Research Excellence (I-CORE), and the Israeli Economic Association Meeting 2015. We are grateful to Gal Baranes, Yuval Benshalom, Anat Carmel, Emma Davidovich, Reut Drori, Adi Koren, Neta Lederer, Or Mazar, Matan Mor, Yael Naor, Vered Por-zycki, and Anita Shtrubel for excellent research assistance. Financial support was generously provided by the I-CORE program of the Planning and Budgeting Committee at the Israel Science Foundation (grant 1821/12) and the Maurice Falk Institute for Economic Research in Israel. The research design underlying this study was

Publisher Copyright:
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