Minorities, ugly, fat and "different" people are discriminated against, there is no question about it. It is very unfortunate, and laws (and education) try to correct this. Unfortunately, those that are discriminated may not be helping their cause by not doing enough to promote themselves.
think if it like they conceded defeat against discrimination.
What is the evidence? Pablo Brañas-Garza & Antonios Proestakis ran some experiments where people were supposed to declare how much they feel they should be compensated to fill the experiment questionnaire. It turns out that obese people were asking significantly less frequently (-5%) for money, and when they ask for some they ask for much less (-20%). What is most important here is that they self-diagnose themselves as obese, less whether they actually. Seeing this, my first reaction was that they ask for less because their opportunity cost is lower, as they do earn less. But the authors take account of the wage. So it must be that obese have such low self-esteem that they cannot be ambitious in what they ask for.
Showing posts with label discrimination. Show all posts
Showing posts with label discrimination. Show all posts
Women's rights and economic growth
Women have few rights in poor economies. They enjoy much more rights in rich economies. There is no doubt the correlation is positive, but what is the causation? Asking this question puts you on a slippery slope, as advocates of women's emancipation are quick to dismiss any hint that underlying economic forces could be the origin of new rights for women, rather than an exogenous political push. What does the literature have to say about this? Luckily, two surveys came out within a week of each other, with contrasting views.
Matthias Doepke, Michèle Tertilt and Alessandra Voena start from two observations consistently documented in the literature. 1) Giving women more rights refocuses private and public spending towards children, in particular health and education. Both lead to more growth. 2) Technological progress increased the costs of a male-dominated society and encourage females to join the labor force. Both lead to women's emancipation. And not put 1) and 2) together, and you have a theory of growth with female empowerment, where males are willing to step back for their own good. If technological progress initiates this virtuous cycle, it is actually not necessary once the cycle started spinning, and we have endogenous growth.
The other survey is due to Esther Duflo, who does not see anything self-sustaining in this cycle. In particular, one needs a constant exogenous push for women's equal rights to keep it going. While the paper above looks at long trends, the second focuses on natural and artificial experiments where the analysis is rather short-term. It is thus not clear to me whether it is really about growth or development. I am thus more convinced by the first paper and hopeful that the virtuous cycle will continue feeding itself.
Matthias Doepke, Michèle Tertilt and Alessandra Voena start from two observations consistently documented in the literature. 1) Giving women more rights refocuses private and public spending towards children, in particular health and education. Both lead to more growth. 2) Technological progress increased the costs of a male-dominated society and encourage females to join the labor force. Both lead to women's emancipation. And not put 1) and 2) together, and you have a theory of growth with female empowerment, where males are willing to step back for their own good. If technological progress initiates this virtuous cycle, it is actually not necessary once the cycle started spinning, and we have endogenous growth.
The other survey is due to Esther Duflo, who does not see anything self-sustaining in this cycle. In particular, one needs a constant exogenous push for women's equal rights to keep it going. While the paper above looks at long trends, the second focuses on natural and artificial experiments where the analysis is rather short-term. It is thus not clear to me whether it is really about growth or development. I am thus more convinced by the first paper and hopeful that the virtuous cycle will continue feeding itself.
More on the long term consequence of slavery in Africa
Since the start of this blog, one of the most popular posts has been one that analyzes the long-term costs of slavery in Africa. Of course, it is about the consequences in regions where slaves were taken from. There is also a region where they have been taken to, that is South Africa. What has been the impact there?
Johan Fourie writes that farmers taking slaves prospered thanks to economies of scale of specialization, to the point that they were considered by some to be the richest in the world at the time. But this advantage did not last long, as the use of slave labor discouraged further immigration from Europe. And as education opportunities were limited to (free) whites, large inequalities were maintained through a period where human capital became more important. These inequalities and the large fraction of poorly educated citizens, even after emancipation and the end of apartheid, stills drags the South African economy down, because institutions emerged to perpetuate these inequities.
This persistent impact of inequality in human capital is consistent with evidence from the US, as I reported in a previous post, with a recent update by the same authors just published recently. Graziella Bertocchi and Arcangelo Dimico expand on their use of US panel data. In short, they find that the education gap between whites and blacks at the county level today is determined by the initial gap in 1940, with only little convergence since. And the initial gap is largely explained by prevalence of slavery in earlier years.
Johan Fourie writes that farmers taking slaves prospered thanks to economies of scale of specialization, to the point that they were considered by some to be the richest in the world at the time. But this advantage did not last long, as the use of slave labor discouraged further immigration from Europe. And as education opportunities were limited to (free) whites, large inequalities were maintained through a period where human capital became more important. These inequalities and the large fraction of poorly educated citizens, even after emancipation and the end of apartheid, stills drags the South African economy down, because institutions emerged to perpetuate these inequities.
This persistent impact of inequality in human capital is consistent with evidence from the US, as I reported in a previous post, with a recent update by the same authors just published recently. Graziella Bertocchi and Arcangelo Dimico expand on their use of US panel data. In short, they find that the education gap between whites and blacks at the county level today is determined by the initial gap in 1940, with only little convergence since. And the initial gap is largely explained by prevalence of slavery in earlier years.
Anonymous applications on the Economics PhD market. Really?
There is unfortunately still some discrimination left in labor markets. Literature has shown that in particular race and gender may matter in some cases, as well as beauty. While this is usually demonstrated by looking at the significance of some characteristic dummies that should not matter in hiring or wage decisions, another way to test for discrimination, at least in hiring, is to compare anonymous job applications to open ones. This is costly to do, and it may infringe some ethical issues, hence this is a rare exercise.
Annabelle Krause, Ulf Rinne and Klaus Zimmermann did this for applications of Economics PhDs to a position in a European institution. I am really puzzled what they expected to learn from such a peculiar market. Indeed, part of the recruitment pool was anonymized before being submitted to the recruitment team. This is very difficult to do properly, as CV, papers and reference letter have plenty of mentions of names and gender. And how to hide that when a candidate has published or is previously known to recruiters? And of course, this can only test up to the selection for the live interview, which is very early in the recruitment process.
In addition, it is very unlikely to find discrimination in such a specialized market. One, recruiting in an academic environment is usually closely scrutinized for discrimination. In fact I have been highly annoyed by the burden it takes to prove one has not discriminated. Two, I would even argue there is reverse discrimination, as recruitment committees are often under strong pressure to hire from "under-represented" groups. Three, the institution that agrees for this exercise is not discriminating consciously, or it is very foolish.
The results are not surprising. No discrimination is found, except a little reverse discrimination for women. It is impossible to generalize the results, as the sample is so small and so specific to this recruiting institution. I really do not see the point of this paper.
Annabelle Krause, Ulf Rinne and Klaus Zimmermann did this for applications of Economics PhDs to a position in a European institution. I am really puzzled what they expected to learn from such a peculiar market. Indeed, part of the recruitment pool was anonymized before being submitted to the recruitment team. This is very difficult to do properly, as CV, papers and reference letter have plenty of mentions of names and gender. And how to hide that when a candidate has published or is previously known to recruiters? And of course, this can only test up to the selection for the live interview, which is very early in the recruitment process.
In addition, it is very unlikely to find discrimination in such a specialized market. One, recruiting in an academic environment is usually closely scrutinized for discrimination. In fact I have been highly annoyed by the burden it takes to prove one has not discriminated. Two, I would even argue there is reverse discrimination, as recruitment committees are often under strong pressure to hire from "under-represented" groups. Three, the institution that agrees for this exercise is not discriminating consciously, or it is very foolish.
The results are not surprising. No discrimination is found, except a little reverse discrimination for women. It is impossible to generalize the results, as the sample is so small and so specific to this recruiting institution. I really do not see the point of this paper.
Job referrals can be more efficient than open search
I a perfect world with heterogeneous workers and jobs, the matches are those that maximize efficiency. But when information about the quality of either is private and cannot be revealed credibly, the economy quickly looses efficiency. The solution is then to make hiring and firing easy, so that good matches can be found by trial and error. Employers also try to gather information about their potential employees, and their socio-demographic characteristics are certainly among them. While this looks like discrimination, it is OK if it is only statistical discrimination. But one can improve on this.
Christian Dustmann, Albrecht Glitz, and Uta Schönberg study job referrals from co-workers. They find that typically shunned minority workers are more likely to be hired the more other minority workers are already present, a clear sign of job referral. In addition, these workers earn on average higher wages and are more likely to stay in such firms. In some sense, this shows that job search networks can be better than open competition under some circumstances. One could even stretch the argument to claim that favoritism could be beneficial.
Christian Dustmann, Albrecht Glitz, and Uta Schönberg study job referrals from co-workers. They find that typically shunned minority workers are more likely to be hired the more other minority workers are already present, a clear sign of job referral. In addition, these workers earn on average higher wages and are more likely to stay in such firms. In some sense, this shows that job search networks can be better than open competition under some circumstances. One could even stretch the argument to claim that favoritism could be beneficial.
Obesity on the German labor market
Being obese makes you a social outcast, especially in countries were obese people are relatively rare. This can have consequences on the labor market, as there is plenty of evidence that handsomeness matters, for example. So are obese people discriminated against on the labor market?
Marco Caliendo and Wang-Sheng Lee look at newly employed people in Germany and find that there is not much evidence of discrimination there. Only obese (but not overweight) women may be suffering in the land of beer and wurst. Of course, one may question the validity of a study that must be relying on very few observations for a subgroup of the sample. Yet, surprisingly, half of the men and 37% of the women are considered overweight or obese, proportions I would never have imagined from walking around German towns. And with sample ages averaging in the thirties, they are relatively young too. As the survey sample is based on people who have been unemployed, I wonder whether the discrimination is rather in unemployment rather than employment.
Marco Caliendo and Wang-Sheng Lee look at newly employed people in Germany and find that there is not much evidence of discrimination there. Only obese (but not overweight) women may be suffering in the land of beer and wurst. Of course, one may question the validity of a study that must be relying on very few observations for a subgroup of the sample. Yet, surprisingly, half of the men and 37% of the women are considered overweight or obese, proportions I would never have imagined from walking around German towns. And with sample ages averaging in the thirties, they are relatively young too. As the survey sample is based on people who have been unemployed, I wonder whether the discrimination is rather in unemployment rather than employment.
The curse of the more trustworthy gender
It sucks to be a female entrepreneur. You are more likely to repay your loan, but you still keep getting smaller loans. As a consequence, your business is smaller than that of your male counterparts. Of course, all this could be due to some common correlates that cause women to be more trustworthy and yet get smaller loans. Or it could be just plain and simple discrimination.
Isabelle Agier and Ariane Szafarz test the latter hypothesis using rich data from microfinance in Brazil. The idea is to verify whether women are discriminated against in the loan application process. Testing for discrimination is not easy as apparent inequities may make economic sense. But if across to populations a lower or equal loan default rate is associated to a higher or equal loan denial rate, then we have an ethical issue. This what Agier and Szafarz test. Sadly, the news are not good. There is significant discrimination and despite being better creditors, they get smaller loans. Even worse, repeat applicants who could thus prove their trustworthiness get even more discriminated. Of course, there could still be some unobserved variable explaining all this, but I cannot imagine what that could be.
Isabelle Agier and Ariane Szafarz test the latter hypothesis using rich data from microfinance in Brazil. The idea is to verify whether women are discriminated against in the loan application process. Testing for discrimination is not easy as apparent inequities may make economic sense. But if across to populations a lower or equal loan default rate is associated to a higher or equal loan denial rate, then we have an ethical issue. This what Agier and Szafarz test. Sadly, the news are not good. There is significant discrimination and despite being better creditors, they get smaller loans. Even worse, repeat applicants who could thus prove their trustworthiness get even more discriminated. Of course, there could still be some unobserved variable explaining all this, but I cannot imagine what that could be.
Affirmative action and stereotypes
The ghetto culture is a very strong absorbing point. Once you are there, it is very difficult to get out, and your children will also have a very hard time. The problem with the ghetto culture is that is harbors values that a very different from mainstream culture, in particular regarding work habits. Those values are instilled by your environment (family, neighbors, community) and when you grow up around peers with poor work habits, it is difficult to acquire better habits.
Maria Sáez-Martí and Yves Zenou make this point and add that even when parents are forward-looking and care about their offspring, they will not make the investment to teach their children good habits if employers take the cultural environment of a potential employee as a signal of work habits. They discriminate, and because they discriminate they turn out to be correct. That is a vicious circle that is difficult to beat, but initiatives like affirmative action can overcome this. The condition is that quotas be high enough.
Affirmative action can be implemented in two ways, imposing quotas on good jobs, and imposing quotas in the majority group (putting some of the ghetto in the mainstream group of applicants). Low quotas are also improving work habits in the ghetto in the second case, but are detrimental in the first case. This is because the advantage of better work habits is absent, wages of good workers are lower and parents put less effort in educating their kids. With the second case, wages of good workers remain high, and parents will help their kids who have then a chance to prove themselves. An alternative policy, integration is only beneficial to the ghetto, and obviously the others will resist integration because it hurts their work habit.
Maria Sáez-Martí and Yves Zenou make this point and add that even when parents are forward-looking and care about their offspring, they will not make the investment to teach their children good habits if employers take the cultural environment of a potential employee as a signal of work habits. They discriminate, and because they discriminate they turn out to be correct. That is a vicious circle that is difficult to beat, but initiatives like affirmative action can overcome this. The condition is that quotas be high enough.
Affirmative action can be implemented in two ways, imposing quotas on good jobs, and imposing quotas in the majority group (putting some of the ghetto in the mainstream group of applicants). Low quotas are also improving work habits in the ghetto in the second case, but are detrimental in the first case. This is because the advantage of better work habits is absent, wages of good workers are lower and parents put less effort in educating their kids. With the second case, wages of good workers remain high, and parents will help their kids who have then a chance to prove themselves. An alternative policy, integration is only beneficial to the ghetto, and obviously the others will resist integration because it hurts their work habit.
On the wisdom of Groupon
For those who are just coming back from their sabbatical in the middle of the Amazon forest, Groupon is an obnoxious coupon provider that recruits members by validating coupons only when a predefined number of users promise to use them. Also, users prepay and obtain vouchers for the purchased good. The scheme seems remarkably popular among consumers, and Groupon recently turned down a US$6 billion buyout offer from Google. While it is successful among buyers, what about sellers? There is at least anecdotal evidence that some retailers regret participating in the scheme, for example when they get swamped by vouchers.
Benjamin Edelman, Sonia Jaffe and Scott Duke Kominers analyze why businesses would want to participate. First, as for any coupon, there needs to be a reason to discriminate between customers, that is, those that consistently looks for good deals from those who do not bother. Second, it is a good way to get a new business known, and thus accept temporary losses on those deals (if you are patient enough). Third, as those coupons are primarily increasing sales, it is important that the marginal cost of the product be rather low. You do not want to be in Groupon to sell personalized cakes. And I would add that you need to either cap the number of available vouchers or be ready to increase capacity in a moment's notice. You cannot reject customers with a voucher, while you could those with only a coupon.
Benjamin Edelman, Sonia Jaffe and Scott Duke Kominers analyze why businesses would want to participate. First, as for any coupon, there needs to be a reason to discriminate between customers, that is, those that consistently looks for good deals from those who do not bother. Second, it is a good way to get a new business known, and thus accept temporary losses on those deals (if you are patient enough). Third, as those coupons are primarily increasing sales, it is important that the marginal cost of the product be rather low. You do not want to be in Groupon to sell personalized cakes. And I would add that you need to either cap the number of available vouchers or be ready to increase capacity in a moment's notice. You cannot reject customers with a voucher, while you could those with only a coupon.
On the consequences of slavery
I reported now long ago on the consequences of slavery in Africa, where it is shown that countries where more slaves were taken still have lower levels of development. It is quite amazing that this can have an impact on average income for so long. But what about the receiving end of the slave trade?
Graziella Bertocchi and Arcangelo Dimico look at county data for the US and find that current average incomes are not related to the inflow of slaves. However, income inequality is. Why would that be? It could be because slave could not own land, and this still has an impact today. Or it could be because of discrimination. Or it could be because of persistent differences in human capital.
Now using a panel data set, Bertocchi and Dimico find the last one is the most likely one. The education gap between blacks and whites has never recuperated, and segregation was certainly part of it. But this strongly persistent effect means that affirmative action still has a reason to be.
Graziella Bertocchi and Arcangelo Dimico look at county data for the US and find that current average incomes are not related to the inflow of slaves. However, income inequality is. Why would that be? It could be because slave could not own land, and this still has an impact today. Or it could be because of discrimination. Or it could be because of persistent differences in human capital.
Now using a panel data set, Bertocchi and Dimico find the last one is the most likely one. The education gap between blacks and whites has never recuperated, and segregation was certainly part of it. But this strongly persistent effect means that affirmative action still has a reason to be.
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