The Supply Side of Discrimination: Evidence from the Labor Supply of Boston Taxi Drivers 
In the United States, an important and ongoing concern is determining whether legally protected classes experience discrimination based on their age, ethnicity, gender, or race. In terms of the labor market, demand-side discrimination has been widely studied for how it may affect market outcomes such as employment or wages. But labor market discrimination can also take place on the supply side, motivated either by taste-based discrimination (personal prejudice) or by statistical discrimination due to workers having incomplete information about the potential demand for their services. Previous economic research has used the taxi industry to study labor supply behavior, as cab drivers have considerable flexibility and choice about the hours they work and the areas they serve. This paper is a comprehensive study of supply-side discrimination in the labor market for taxi service in Boston. The author uses data on millions of trips made by Boston taxi drivers in 2010–2015 to examine whether supply-side discrimination exists based on the demographic characteristics of the residents living in Boston neighborhoods.
Key Findings
- Even when market differences in local earnings opportunities are taken into account, disparities exist in the supply of taxi services across Boston neighborhoods with different demographic characteristics. As the population share of female, black, or Asian residents in an area rises by 1 percentage point (2–11 percent of the area sample mean, depending on the particular demographic group), the responsiveness of driver hours worked in that area to local wage increases falls by 5–7 percent.
- The labor supply discrimination estimated is primarily statistical, particularly for black and Asian residents. Evidence of taste-based discrimination, while limited, is strongest for female residents.
- Discrimination is reduced as drivers gain more on-the-job experience and are able to better predict what they are likely to earn when serving a given neighborhood.
Implications
These findings suggest that the unequal provision of taxi services across Boston neighborhoods is partly due to statistical discrimination based on wage uncertainty. A remedy for this might be improving driver knowledge of local earnings opportunities in order to reduce such uncertainty. More generally, the paper’s findings—regarding the role that uncertainty or individual preferences can play in labor supply choices—may be applicable to other industries where workers can flexibly adjust their work hours.
Abstract
This paper investigates supply-side discrimination in the labor market for Boston taxi drivers. Using data on millions of trips from 2010–2015, I explore whether the labor supply behavior of taxi drivers differs by the gender, racial/ethnic, or age composition of Boston neighborhoods. I find that disparities in shift hours due to neighborhood demographics exist even when differences in local earnings opportunities are taken into account. I observe heterogeneity in the amount that drivers discriminate and find that this discrimination is primarily statistical rather than taste-based. As drivers gain experience and learn to better anticipate wage variation, discrimination decreases.