Economics of Discrimination Flashcards
(14 cards)
Taste based discrimination
Taste based discrimination; dislikes of a group affecting treatment. A preference not to interact, explicit or implicit.
Becker; if people have prejudices against certain groups or genders the market will respond with a less likely to hire and or a lower wage (to compensate for having to interact) (shift left in demand)
If one employer does not hold discriminatory preferences, they benefit economically by hiring from discriminatory groups. Competitive markets may lead to discriminatory groups being driven out of businesses, limited by market failures.
Statistical discrimination
Refers to a situation where, when selecting between different
individuals, a selecting agency uses the average characteristics
of groups that these individuals belong to as proxies for the
characteristics of the individuals, in lieu of direct measurements
of these characteristics for the individuals.Can be accurate or inaccurate.
Implicit bias
Bias one holds without necessarily being aware of it.
Audit Study
A type of field experiment where auditors actors) are matched on characteristics and tested for discrimination.
List and Gneezy
Automobile repair
Discrimination where disabled people quoted more because higher search costs → profit maximising
Correspondence Study
Sending identical resumes but for a change in ethnicity or discriminatory group to see if call-back rates differ.
Bert and Mull
Fake resumes with different ethnic names, uniform
discrimination (50%)
Booth Leigh and Varangove
4000 resumes across racial groups, with anglo-saxon, italian, indigenous, chinese, and middle eastern, fro different types of jobs, wait staff, sales, data, customer service
Chowdhury and Slonim
Adopters → reduced discrimination
For admin appropriation was critical
Graduate jobs adoption is only ⅓ discrimination
Limitations
Interview process
Pay
Treatment
Ethics
Natural Experiments
A research design that establishes cause and effect without random assignment of treatment, changes that affect some people but not others (compare discrimination into places where in one it is illegal)
Orchestra
Preferences
Ability
Discrimination
Policies
Legal
Antidiscrimination laws
Sociological
Acknowledgement, research, education, interaction
Structural
Addressing barriers
Redlining
Selective raising of prices for certain communities with certain proportions of certain ethnic groups on the basis that the presence of even one or two ethnic families could decrease property prices. Irrespective of income, blacks had a significant rate of declined mortgage.
Exposing Housing Discrimination: A Conversation with Marge Turner and Justin Carter
A white and a black make the same requests and same income and assets and employment, identical customers but ethnicity. Over 100s of tests, whites offered and showed more units. Blacks showed 18% less units.
Hard to detect discrimination.
Booth, Leigh, & Varganova. (2012). Does Racial and Ethnic Discrimination Vary Across Minority Groups? Evidence From a Field Experiment. Oxford Bulletin of Economics & Statistics, 74(4): 547-573.
4000 resumes across racial groups, with anglo-saxon, italian, indigenous, chinese, and middle eastern, fro different types of jobs, wait staff, sales, data, customer service
Goldin & Rouse. (2000). Orchestrating Impartiality: The Impact of “Blind” Auditions on Female Musicians. American Economic Review, 90(4):715-741.
Hypothesis; blind testing reduces gender discrimination in orchestra hiring practices
Methodology;
Observation in the differences of hiring practices as blind auditions were introduced across different rounds
Results
In 1970, 5% of Orchestras were female
Preference (men may have more time to dedicate to performance)
Ability; something unique about men
Discrimination;
Taste based; male musicians, audiences, and directors dislike women
Statistical; differences in stereotyped ability or customers willingness to attend and pay for female performers
1970 - 10% new hires female
1990 - 35% of new hires female
Blind auditions increase women’s chances of hire by 50%
Roster data; accounts for 25% in increase in % female in orchestra 1970 to 1966
Gary Becker
Supply and demand diagram, lower demand for discriminated against groups, lower quantity hired lower prices. Firms benefit from hiring discriminated against people
List & Gneezy (2012) → Disabled and Auto Quotes
Hypothesis; are disabled people discriminated against in service markets, e.g. automobile repair market
Methodology;
Audit study with paired testers, one wheelchair and one without
Cars all belonged to the disabled people
Each went to 6 shops, none the same twice
Looking for initial quote
Theory
Taste based; distaste for disabled
Statistical; less likely to get other quotes, less competition, can charge more (1.67 quotes, perceived 1.85, versus 3.5 quotes for non disables, perceived 2.85)
Findings
Initial average quote of 30% (213) more to disabled testers
The disparate treatment of disabled people is consistent with a model of statistical discrimination driven by search cost differences.
Chowdhury, Ooi, & Slonim (2016)
Replicated Booth et al (2012), but varied first name of Chinese applicants to have either a Chinese or Anglo sounding name (which they refer to as “Adopters”)
Testing whether ethnicity or cultural assimilation can better explain the results
Results
Admin jobs; cultural adoption was critical, adoption explains essentially all discrimination
Taste-based preference for assimilation
Statistical; reflects language differences
Graduate jobs; cultural adoption explains ⅓ of discrimination
