Suppose we are interested in whether minority groups are being treated differently in the labor mar-...

 

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Suppose we are interested in whether minority groups are being treated differently in the labor mar- ket. Y; is the individual i's hourly wage, and M; is the binary variable to indicate whether the indi- vidual belongs to the minority group or not. • Can we use the following equation to study whether minority groups are being treated differ- ently? Why? Yi Bo + B₁M; + €į • Could you describe what the audit and correspondence methods are? Why these two methods can solve the issues in part (a)? • What's the limitation of audit and correspondence methods? • Could you explain some potential sources of discrimination? Suppose we are interested in whether minority groups are being treated differently in the labor mar- ket. Y; is the individual i's hourly wage, and M; is the binary variable to indicate whether the indi- vidual belongs to the minority group or not. • Can we use the following equation to study whether minority groups are being treated differ- ently? Why? Yi Bo + B₁M; + €į • Could you describe what the audit and correspondence methods are? Why these two methods can solve the issues in part (a)? • What's the limitation of audit and correspondence methods? • Could you explain some potential sources of discrimination?

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Solution a The equation Y 60 B1M 6 is not suitable for studying whether minority groups are being treated differently in the labor market because it assumes a constant difference in wages between mino... View the full answer