Labor Market Discrimination and Sorting: Evidence From South Africa

This paper collects a unique data set of classified ads and exploits quasi-random variation in the applicant pool composition to show that there exists hiring discrimination against immigrants in South Africa's informal sector. Consistent with a tournament models in which immigrants are penalised, I find that both immigrant and native job seekers receive more employer clicks on their profile when being pooled with immigrant job applicants. Results also show that immigrants search further away, especially if they live in areas with high employer discrimination. This spatial sorting presents an important cost of discrimination that has largely been ignored in the literature.