Black Job Applicants and the Hiring Officer s Race Abhishek Vemuri Nathan Schares Tony McDonald John Roby Brad White Sam Pudenz
Why the Study? Do black hiring agents receive more applications from black job applicants than white hiring agents do? Are blacks hired by more black hiring agents at establishments than establishments with white hiring agents? Does this cause discrimination against blacks?
Introduction Assumption: The race of the hiring agent directly reflects the applicant pool race of the establishment. The data being presented is from a survey conducted from a 1992-1994 Multi City Employer Survey
Focus of the Study Focuses on the firm Spatial Factors Racial Composition Transit The firm s hiring agent Racism on part of hiring agent Most recent hire Advertisement Favoritism towards own race
Nature of Potential Discrimination Statistical Discrimination Applicants prior perceptions Hiring agents prior perceptions Taste Discrimination Hiring agent s preferences Firm owners preferences Hiring agent s preferences may be moot
Origin of Data Multi City Study of Urban Inequality Boston, Atlanta, Detroit, Los Angeles 3,000 Firms From June 1992- May 1994 Household survey and Survey Sample Inc. Household Survey: Asked individuals employer and location Attempts to see the neighborhoods employees are from SSI Provided List of Employers Telephone interview conducted with firms
Telephone Survey Self identified racial group Establishment Characteristics Size, Industry, Distance from Public Transit Hiring and Screening Behaviors Skills required for jobs Race of last hire
Advantages of Data Obtained information on the following Accounts for neighborhoods of employed workers Establishes the amount of the population that is employed by firms Gives a signal on firm size Representative of the actual industry and area
Estimating Equations R = race of hiring agent in firm k X = variety of independent establishment-level variables for firm k D = matrix of variables describing the characteristics of most recent job filled Note: Equations 1 and 3 are estimated with the Ordinary Least Squared method, equation 2 was estimated using probit
Ordinary Least Squared Standard Linear Regression Equation 1 and 3 y = Xb + e y = dependent variable or vector, X = matrix of independent variables b = vector of parameters to be estimated e = vector of errors with mean zero that make the equations equal.
Probit Model Dependent variable can only be 1 or 0 Equation 2 Pr(y i =1)=F(x i 'b) y i = Dependent variable x i = Continuous independent variable b = parameter to be estimated F = normal cumulative distribution function
Analysis Specifics Black application rate is both dependent and independent Both influences and is influenced by factors relating to black employment The applicant pool is falls within the range presented by the two models Results lie between both models
Analysis Specifics continued Establishment-level Variables Vacancy rate Frequency, turnover, average duration Hiring rate Skill needs Firm Recruitment methods Dummy variables Task variables Firm practices Equation 1 and 2
Results-Unadjusted Differences in Hiring Outcomes Ratio of probability last hire being black to average black application rate Rate which firms hire black out of available black applicant pool Higher the ratio: stronger inclination to higher black For pooled sample and each metro area, Firms with black hiring agents had higher ratio than firms with white/other minority hiring agents Black agents most inclined to hire black out of available applicant pool
Results-Unadjusted Differences in Hiring Outcomes Potential problems with the ratio: 1. Endogenously determined application rates push ratio Towards one: understates true racial disparities amongst firms in likelihood of hiring black out of applicant pool 2. Only measured relative quantity of applicants, not quality Self-selection of higher quality black applicants to firms with black hiring agents More blacks hired relative to white hiring agent firms
Table 3
Results-Model OLS regression Basic firm characteristics and factors affecting employers preferences account for about 1/3 of the difference in black app. rate between white/non-black and black employers % firm s customers who are black and Affirmative Action practice account for majority of the 1/3 difference at 38% Even after accounting for observable factors, black app. rate for firms with black hiring agents is 12 percentage points higher (considerable) than rate for firms with white hiring agents
Table 4
Results-Model Probit regression Regression without specifications shows baseline effect of hiring agent race on hiring a black applicant Employers with black hiring agents are statistically more likely to hire a black worker than are employers with white/non-black minority hiring agents Firms with black agents are 21 percentage points more likely to have recently hired a black applicant than employers with white hiring agents
Results-Model Probit regression Regression adds black app rate to basic firm characteristics Differences between white & black agent firms in black app rate explain about 50% of estimated effect of black hiring agents on hiring blacks Fully specified regression explains about 60% more of black hiring agent effect on hiring blacks than does base line regression Black hiring agent effect estimated to raise hiring of blacks by about 6 percentage points
Results-Model OLS regression Accounting for all relevant factors, black hiring agents are positively associated with proportion of employees who are black In black agent firms, % of black employees is between 16 percentage points (black app. rate included) & 34 percentage points (black app. rate excluded) higher than in white agent firms
Decomposing Results Omitting black app. rates for hiring outcomes & app. rate=dependent variable Estimated effect of black hiring agent is 42%, 45%, and 57% of raw differential for black app. rate, last-hireblack, and % workers black respectively Fraction of customers who are black accounts for 25-36% of differential (large), firm s size/location less significant
Decomposing Results Adjusting for diverse set of firm characteristics and employer behaviors and preferences Black hiring agents are more likely than white hiring agents to receive black applicants Ratio of last hire is black to % of applicants black, is higher for black agent firms Difference smaller than unadjusted ratio-->black agent firms more inclined to hire blacks out of the black pool.
Assuming causal relationships Overall results suggest firms with black hiring agents more likely to hire blacks than white agent firms Racial composition of customer base has effect Racial makeup of hiring Decomposing Results/Summary
Possible Issues Only non-college jobs evaluated Data set limited to 4 cities (albeit large ones) Lots of unobserved traits of firms and employers not included, affect application pools and hiring outcomes Black app. rate is endogenously determined No accounting for people of interracial backgrounds Measuring of quantity versus quality Are you ever going to get good telephone results?