Anticipated labour market discrimination and educational achievement

Some theories suggest that students who anticipate discrimination in the labour market may invest more in easily observable human capital like education, to signal their productivity to employers and reduce the scope for statistical discrimination. Empirical research on this issue has been hampered, however, by a lack of direct information on anticipated labour market treatment. We use data from a unique longitudinal survey of young people in England to link student expectations of facing discrimination in the labour market to subsequent performance in high-stakes exams. Our findings suggest that the anticipation of labour market discrimination is associated with better exam performance, consistent with the view that students are seeking to counteract potential future penalties.