Are Emily and Greg More Employable Than Lakisha and Jamal?

That's the title of a paper by Marianne Bertrand and Sendhil Mullainathan published in the most recent issue of the American Economic Review (September 2004) and available here. Bertrand and Mullainathan (henceforth B&M) conduct a field experiment by sending out fictitious resumes to a number of employers in Chicago and Boston. The resumes were constructed to depict high quality candidates and low quality candidates and then randomly assigned White-sounding names and Black-sounding names. B&M then recorded the rate at which candidates were "called back" in order to setup an interview. White names received about 50% more callbacks than Black names. The differential callback rate is taken to be evidence of continuing racial discrimination in American labor markets.

B&M go on to discuss the implications of their results for the leading economic theories of labor market discrimination, namely, taste-based and statistical discrimination models. Taste-based models essentially argue that employers (or fellow employees or customers) have a "taste" for avoiding people with particular characteristics (race, gender, etc.). Such prejudice comes at a price though: a discriminating employer willingly passes up on a highly qualified minority, thereby overpaying for a worker from the majority group. (See Gary Becker for details on this theory.)

Statistical discrimination is primarily the result of imperfect information regarding the productivity of potential employees. Employers may resort to using group-based characteristics as proxies for individual productivity as a means of reducing the cost of searching for new employees.

According to B&M, their results imply that "training programs alone may not be enough to alleviate the racial gap in labor market outcomes...[and] if African Americans recognize how employers reward their skills, they may rationally be less willing than Whites to even participate in these programs."

My take: I wonder if African American parents will feel pressure to choose White-sounding names for their children in the future.