Lecture 4

Question 1

Taste-based discrimination

Answer 1

is based on the idea that employers are
prejudiced against immigrants and get disutility from hiring immigrants.

Question 2

discrimination
coefficient

Answer 2

w(1+d)

Question 3

statistical discrimination

Answer 3

An employer may for instance believe that an immigrant worker is less
productive than a native worker because the average unemployment rate is
higher among immigrants than among natives.

Question 4

How measure discrimination?

Answer 4

𝑤𝑗 = 𝛼 + 𝛿𝐼𝑗 + 𝜀 ,where w is the individual’s wage
− I is a dummy variable equal to 1 if the individual is an immigrant and 0
for natives.
− If 𝛿𝛿 is negative, immigrants have lower wages.

Question 5

How measure discrimination?

Answer 5

The Oaxaca decomposition is a correct measure of discrimination only if we
can observe all skills. (Ability, effort, motivation, quality of education…).

Question 6

correspondence testing

Answer 6

The idea is to send
equal applications (for jobs, apartments, loans etc.) and randomly alter the
name of the applicant. One name will be foreign sounding and one Swedish
sounding. Everything else is the same the applicants.