Two new papers looking at various aspects of discrimination in product and labor markets. The first, by Ian Ayres and coauthors, examines baseball card sales:
We investigate the impact of seller race in a field experiment involving baseball card auctions on eBay. Photographs showed the cards held by either a dark-skinned/African-American hand or a light-skinned/Caucasian hand. Cards held by African-American sellers sold for approximately 20% ($0.90) less than cards held by Caucasian sellers, and the race effect was more pronounced in sales of minority player cards. Our evidence of race differentials is important because the on-line environment is well controlled (with the absence of confounding tester effects) and because the results show that race effects can persist in a thick real-world market such as eBay.
The second looks at skilled immigrant labor in Canada. Canada, like many other first world countries, has made it a policy to strongly select for skilled immigrants to augment their workforce. Unfortunately, these immigrants do not do as well as one would hope in the labor market. Philip Oreopoulos explores this issue in greater depth:
Thousands of randomly manipulated resumes were sent in response to online job postings in Toronto to investigate why immigrants, allowed in based on skill, struggle in the labor market. The study finds substantial discrimination across a variety of occupations towards applicants with foreign experience or those with Indian, Pakistani, Chinese, and Greek names compared with English names. Listing language fluency, multinational firm experience, education from highly selective schools, or active extracurricular activities had no diminishing effect. Recruiters justify this behavior based on language skill concerns but fail to fully account for offsetting features when listed.
While they speak for themselves, here are a few collective comments on these papers:
1. Both illustrate the power of audit studies, where researchers elicit real-time behavioral responses in the field to some often innocuous stimuli. Resume experiments have a long history in economics and sociology. The EBay thing is new, and quite innovative.
2. Audit studies give us an example of behavior, but can further be extended to think about mechanisms and policy. One reason I like the Oreopoulos paper is that his randomization involved an explicit countersignal to having an immigrant last name. Unfortuntately, it didn't work to reverse the discriminatory effect, but it is informative that signaling language skills failed. What would be nice is to further extend this, both to other policies, but also to a further elucidation of mechanisms. I think qualitative work could be very useful in this regard. (My colleagues and I did this in a paper about corruption).
3. Both of these studies reveal that taste-based or statistical discrimination is pretty deep seated, though it may lurk in the shadows. So what to do about this? Jumping from (2), I hope the next wave of experiments look at different sorts of policies. Are there other nudges that can be used to counteract these forces? Or will immigrants have their change from Shankaranarayan to Steve in order to get jobs?