Ethnic differences on the labor market : How does negative attitudes affect employment probabilities? 

Abstract: There is a significant gap in employment rates between people born in and outside of Sweden. Previous literature and theory present evidence of discrimination being a part of the gap. This paper studies the differences in employment between foreign-born and natives in Sweden. The terror attack in Stockholm in 2017 is used as an exogenous variation in attitudes towards foreign-born individuals to measure the discrimination. By collecting individual and aggregated data from Swedish statistics, the study examines how the negative attitudes following the terror attack affect ethnical differences in employment. Data is also collected from retriever to analyze the media coverage around the time of the incident to pinpoint a source of the attack and compare with the development of the employment after the attack. Using the difference-in-differences approch, result was found suggesting that the expected negative attitudes did not affect foreign-born individuals' employment probabilities. However, there were some negative effects shortly after the attack, but they were very small. Results are in line with the large spike in media coverage around the time of the incident which quickly decreases in the months after. A possible explanation of the results is that most of the employers don't let prejudice decide when making hiring decisions. Because the negative effects are very small nd only in the short run, this paper concludes that the expected attitude shift following the terror attack did not affect immigrants' employment probabilities.