| Abstract: | Detecting ethnic discrimination in the labour market using individual data is aggravated by individual ethnic‐specific characteristics that are unobserved by the researcher. In an attempt to estimate the effect of skin colour on the probability of being employed (vs, unemployed), the labour market success of foreign‐born adopted individuals is compared with that of natives. Specifically, the unexplained differences in the probability of being employed between natives and adoptees is investigated using Oaxaca‐Blinder decomposition methodology. It is found that adoptees with dissimilar looks to natives fare worse in the labour market, measured as a lower probability of being employed, than natives, and that these differences can be attributed to an unexplained difference rather than a difference in characteristics observed by the researcher. Also, such large differences are not found for adoptees with a similar appearance to natives. Hence, we cannot exclude the possibility that skin colour discrimination exists in the labour market. |
