Poor - 3

Front 1

What is Discrimination?

Back 1

a condition by which members of one group are treated differently than members of another group solely on the basis of group membership

Hint 1

• Taste based discrimination
• Statistical discrimination

Front 2

Describe Taste-based Discrimination?

Back 2

- based on a distain for blacks
- blacks are paid less than whites for equal skills

Hint 2

Implications include
- wage discrimination
- blacks not working in certain sectors

Front 3

Describe Statistical-based Discrimination?

Back 3

- Firms care about the productivity of workers which is not observable
- Instead firms observe a noisy signal of productivity

Hint 3

Case 1: blacks blacks will have lower expected productivity than whites, based on signal - and be paid accordingly
Case 2: firms put more stake on noise level of unbiased signal

Front 4

How to measure discrimination?

Back 4

Regression modeling
- Are we really controlling for all the attributes of productivity? In most cases we do not have a control for ability.
- The Xs might reflect decimation?
- What about non-workers?

Audit Pair Study
- precisely control for the backgrounds
- control for unobserved attributes
- down side of this approach have to do with cost and generalizability

Front 5

Results of regression study

Back 5

- Use AFQT scores as proxy for ability and find that they can completely eliminate the black-white gap for women and can reduce it by about 2/3rds for men
- Unadjusted, black-white differences in AFQT scores are about the equivalent of the impact of 4 years of schooling.
- Adjusting for differences in family background and school attributes, crudely measured, drops the black- white difference in AFQT scores down to the equivalent of about 2 years of schooling.

Front 6

Results of audit study?

Back 6

- Whites with a criminal records are about half as likely to get a callback as whites without criminal records.
- Blacks with a criminal records are about 1/3rd as likely to get callbacks as blacks without criminal records.

Hint 6

- Call back rates for whites are 50 percent higher than callback rates for blacks – equivalent to about 8 years of experience.
- Black names get lower returns to high quality resumes. There was almost no difference in callback rates between high and low quality black resumes.
- Neighborhood matters, but it matters the same for black and white names.

Front 7

What is spatial mismatch hypothesis?

Back 7

Involuntary housing segregation disadvantages poor inner-city workers’ labor market outcomes by isolating them from the labor market opportunities they are most qualified for.

Hint 7

Requirements for spatial mismatch hypothesis
- Residential location is constrained by race
- Firms face higher startup or other cost in areas where residents are constrained.
- Job search and commute costs are non-trivial Basically SMH is about the labor market not working
properly
- Workers can’t move closer to jobs because of housing discrimination
- Firms can’t move closer to workers because of higher costs.

Front 8

Methodological issues in evaluating SMH

Back 8

- Residence is endogenous (MTO)
- Omitted variables – may be related to neighborhood and search outcomes.
- Modeling space in job availability – Required that we know where applications live
and work (or search for work)
– Also requires that we know something about the demand side (i.e., where the jobs are located)

Hint 8

- Most jobs for non-college educated workers are located in “job rich” areas located more than 10 miles from the center of the black community that were not served by public transportation
- Suggest that blacks are and Hispanics, who are more residentially constrained, are more sensitive to the localized measure of job availability which is consistent with barriers to residential mobility.

Front 9

policy implications of SMH

Back 9

- Housing discrimination and residential segregation – enforce fair housing laws
- Public transportation–makesurethatitcanget people to where the jobs are quickly
- Urban planning

Front 10

Culture of Poverty?

Back 10

- Members of the COP are disengaged from most institutions and out right hostile to some (the police, welfare agencies, immigration officials, ect).
-Members have knowledge of mainstream culture, but don’t live it.
- Members may dress or wear their hair differently or otherwise physically identify themselves with the COP