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Systemic Discrimination: Theory and Measurement Applied Microeconomics Group Seminar

Speaker: Dr Peter Hull, Brown University and NBER

Abstract: Treatment disparities across protected groups, such as race or gender, are widespread but often difficult to interpret. The economics literature tends to measure discrimination by disparities that can be interpreted as the direct causal effects of group membership—what we term direct discrimination. Work in other fields has noted how such measures are incomplete, because they miss important systemic (indirect) channels for discrimination. This paper develops new tools for modeling and measuring both direct and systemic forms of discrimination. Systemic discrimination arises from group-based differences in non-group characteristics, conditional on a researcher-chosen measure of underlying qualification. Standard tools for measuring direct discrimination, such as audit and correspondence studies, cannot detect systemic discrimination. We propose a measure of systemic discrimination based on a novel decomposition of total discrimination—disparities that condition on underlying qualification—into direct and systemic components. Systemic discrimination can be backed out of this decomposition given (quasi-)experimental estimates of total and direct discrimination. We illustrate these tools with a hiring experiment, in which direct discrimination leads to systemic discrimination in subsequent evaluations. Standard measures miss the majority of discrimination in this setting. Our framework shows how initial differences in beliefs or preferences can have persistent effects, driving disparities through systemic channels even when direct discrimination is eliminated.

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