When the Name Matters: An Experimental Investigation of Ethnic Discrimination in the Finnish Labor Market

Abstract

This article considers the possibilities and limits of human-capital credentials in entering the labor market for immigrants in Finland. It reports findings of a correspondence study on how employers respond to job applicants of five different backgrounds who were otherwise equivalently matched on various demographic and human-capital characteristics. The findings strongly indicate the continuing salience of ethnicity in securing employment opportunities in the Finnish labor market. Employers significantly prefer Finnish applicants over ethnic candidates, and within ethnic applicants, they prefer candidates with a European name over a non-European name. They further show that locally acquired human capital provides a better payoff only when the job candidate belongs to a group that is placed higher on the ethnic preference ladder. Drawing on the empirical observations, the article thus suggests that a recruitment process driven by abstract or impersonal criteria and governed by mere considerations of human capital in real-life situations is much less prevalent than often claimed.