As socio-emotional skills like teamwork, leadership, and empathy become increasingly important in hiring decisions of firms, a recent IZA discussion paper by Yashodhan Ghorpade and co-authors examine what role these skills play in a labor market marked by the presence of ethnic discrimination.
The authors conducted an audit experiment in Malaysia, a multi-ethnic, upper-middle income economy with some indications of ethnicity-based discrimination in hiring. The study involved sending fictitious job applications to around 3,000 employers through a job portal, randomly varying signals of ethnic and gender identity, and two soft skills – teamwork and leadership – in candidate CVs.
Discrimination by ethnicity, not by gender
The paper finds that applications of male and female candidates are equally likely to get callbacks, and as previous studies in this context have also shown, Malay and Indian-ethnicity candidates are systematically less likely to be contacted than Chinese-ethnicity candidates. However, signaling teamwork skills (by mentioning collaborative teamwork experience in an internship and in hobby groups, and highlighting teamwork skills in the application summary) reduced the discrimination experienced by Malay and Indian ethnicity candidates by 40 percent.
Signaling leadership, however, does not appear to affect the likelihood of discrimination. This suggests that if ethnicity is used by employers as a proxy of skills they cannot observe in CVs, acquiring and signaling soft skills, especially teamwork can reduce the extent of discrimination faced by disfavored groups.
Labor market competition matters
The study also finds that firms that face greater competition are less likely to discriminate based on ethnicity and that when there are fewer high-quality candidates for a given position, Malay and Indian candidates are less likely to be discriminated against.
These findings have important policy implications: Firm competition can be promoted as a measure to reduce discrimination in the labor market. On the supply side, a better matching of worker quality to job positions can improve hiring opportunities of discriminated groups.