Labor Economics 5th Edition by George Borjas

Exercise 2

Feeling that local firms follow discriminatory hiring practices, a non-profit firm conducts the following experiment. It has 200 white individuals and 200 black individuals, all of whom are similar in age, experience, and education, apply for local retail jobs. Each individual applies to two jobs, one in a predominantly black part of town and one in a predominantly white part of town. Of the white applicants, 120 are offered jobs in the white part of town while only 80 are offered jobs in the black part of town. Meanwhile, 90 of the black applicants are offered jobs in the black part of town while only 50 are offered jobs in the white part of town. Using a difference-in-differences estimator, do you find evidence of discriminatory hiring practices If there is discrimination, is it most likely employer-based, employee-based, customer-based, or statistical