Hubert H. Humphrey School of Public Affairs

Hubert H. Humphrey School of Public Affairs

UNIVERSITY OF MINNESOTA

Twin Cities Campus

PA 8312 Analysis of Discrimination

Fall, 2017

Lectures: Tuesdays and Thursdays 11:15AM- 12:30PM, Humphrey School 35

Lab: Tuesdays 1:00 PM- 2:15 PM, Humphrey School 85

PA8312 is designed for advanced MPP students and Ph.D. students in Public Affairs, Applied Economics, and allied fields. Grading is based on six (6) problem sets, a midterm examination, team analysis of assigned reading(s) and a publishable-quality Research Note. A diagnostic examination will be given at the beginning of the course.

Syllabus, readings and class information

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Computer Software and Data Sets

Students will be expected to use STATA. Further information about using this software is available at:

A “STATA primer” is also available on the course website.

Data sets used in the problem sets are:

The American Community Survey (ACS) 2007 3% sample of Minnesota
The American Community Survey (ACS) 2012 5% sample of New Jersey
The National Child Abuse and Neglect Data System (NCANDS) 2011-15
Minnesota Department of Health Center for Health Statistics Microdata on Mortality 2011-15

You can find all the above data sets on the Moodle site under the section “Data Sets for the Problem Sets”.

Recommended Textbooks

Students in this class have varied backgrounds in statistics and quantitative methods. For students desiring a text on econometrics, two textbooks are strongly recommended:

Using Econometrics: A Practical Guide, by A.H. Studenmund. Any edition. This is the text assigned for the Regression and Multivariate Techniques classes at Humphrey (7th edition $157.00 from Amazon; used copies of earlier editions widely available.)

A Guide to Econometrics, by Peter Kennedy. This book is slightly more advanced than Studenmund and covers a wider variety of topics. It is available online for under $40.

Disability Accommodations

The University of Minnesota is committed to ensuring equal learning and working opportunities for disabled students and guests by increasing the capacity of communities to eliminate physical, programmatic, policy, informational, and attitudinal barriers. This course will provide reasonable accommodations for students or guests with physical, sensory, cognitive, systemic, learning, and psychiatric disabilities. Please contact the instructor or his assistant to discuss accommodations for this course.

Incompletes

Incompletes are strongly discouraged. All students should plan to complete all requirements by the due dates.

To receive an “I”, the student must contact the instructor before the last day of class to request permission. The instructor and student should discuss specific guidelines, conditions and/or time limits for course completion, and the consequences of failure to complete outstanding coursework.

All coursework included on a student's degree program must be complete, with grades posted, to be eligible for degree clearance. However, incomplete courses not included on the degree program do not need to be completed for this purpose. Graduate School students are not permitted, under any circumstances, to retroactively withdraw from a course, including any incomplete course that is not a degree requirement. Incompletes are not calculated into a Graduate School student's grade point average. The maximum number of credits of incompletes allowable at the Humphrey School is six[1]. For detailed policy on incompletes, please refer to the university grading policies ( and the Humphrey School grading policies ( - TOC-Incompletes).

Overview

This is a skills-based course designed to introduce students of applied economics, policy analysis and other applied social sciences to the tools of measuring and detecting discrimination in the market and non-market contexts. The focus is on the application of the modern tools of labor econometrics and race relations research to specific problems of market and non-market discrimination. Students will read, summarize and synthesize classic journal and recent articles on the economics of discrimination. They will work through several exercises designed to sharpen empirical skills related to analyzing discrimination.

Students are expected to have a working knowledge of intermediate microeconomics, basic statistics and regression analysis and some familiarity with STATA or similar software programs. Lab sessions are designed to provide a review of key topics in the empirical analysis required for the completion of the exercises.

Three basic objectives of the course are:

a)To summarize and synthesize the economic theory and evidence on market and non-market discrimination.

b)To apply systematically conventional tools for measuring and detecting discrimination in various market and non-market contexts.

c)To understand the advantages as well as the limitations of existing methods for measuring and detecting discrimination.

Methods and Procedures

Lectures: This course integrates the theory, evidence, and methods of measuring and detecting discrimination with policy-analytical techniques for evaluating alternative remedies to discrimination. Lectures will build upon and expand beyond the assigned readings. Students are expected to have read and thoroughly digested the contents of the essential readings prior to the scheduled lecture. Lectures generally will be on Tuesdays and, if necessary, extended to part of Thursdays.

Readings: The lectures build and expand upon the essential readings assigned as well as many of the optional readings. Students should read the "essential readings" for content and substance. You should not spend too much time on the details or the proofs on the first reading. Then, you should re-read theessential readings to glean any particularly revealing insights or potential applications. If time permits, select one or more of the related readings and offer a comparison.

Critique and Evaluation of Assigned Reading: Discussion of the lecture materials and readings will take place on Thursdays. Students will form teams of 3-4 to read, critique and evaluate an assigned reading that offers particular insights regarding the lecture for the week. The critique and evaluation should be 1-2 pages and have the following format:

Summary of key points and conclusions of the assigned reading
Identification of significant assumptions, limitations or caveats
Analysis of how the findings or conclusions might change under violations of the key assumptions of the paper

Students will lead a class discussion of the assigned article/reading and offer illustrations of counter-examples to support the views expressed in their critique/evaluation. The critique/evaluation paper is due by 8:30 am on the day of the presentation.

Problem sets: There are six problem sets and each of them poses different challenges to measuring discrimination. Students will gain experience reading in each of the data sets provided and then performing conventional tests of statistical significance. Then, students will apply the tools and techniques of discrimination analysis to test hypotheses about particular forms of discrimination. Students will be assisted by the TA to achieve hands-on applications of the tools presented in the course. Please print out your answers along with the do.file when you submit your problem set in the Lab. Due dates for the lab assignments are posted in the weekly schedule below.

The Midterm examination covers the economic theory of discrimination and key tests of discrimination. The examination is take-home and will have two parts: a required essay question and a series of short-answered questions. The examination is comparable one part of the four-part Ph.D. Field Examination in Policy Analysis.

Research Note: Students are expected to produce a professional-quality, Research Note, of 2,000 – 2,500 words, including tables, references, captions, and footnotes. A Research Note is much shorter than a typical journal article and can take the form of one of the following:

A re-estimation of a previously published analysis that adopts an alternative model specification or estimation technique and compares the results;
Presentation of new data or evidence that confirms or contradicts previously reported findings;
Commentary or critique of the existing theory or empirical result

The Research Note can be on any topic but must be closely aligned to the substantive focus of the course.

Grading:

Problem Sets will be graded by the TA. Late problem sets will not be graded and will receive a score of N. The short answer section of the midterm will be graded by the TA. The essay question of the midterm, team assignments and the research note will be graded by the Instructor. Peers will evaluate the team presentations. There will be within-group peer evaluations as well.

Grading Scale for the Midterm Examination, the Paper Critiques and the Research Note:

A+100B+85.0C+70.0D+55.0

A/A+97.5B/B+82.5C/C+67.5D/D+52.5

A95.0B80.0C65.0D50.0

A-/A92.5B-/B77.5C-/C62.5D-/D47.5

A-90.0B-75.0C-60.0D-45.0

B+/A-87.5C+/B-72.5D+/C-57.5F+/D-42.5

Grading Scale for Problem Sets:

S+100

S90

S-80

N70

OVERALL GRADE

Problem Sets30%

Team Presentations (Peer-evaluated) 5%

Within Team Peer Evaluation 5%

Team Paper Critique/Evaluation20%

Midterm Examination20%

Research Note 20%

TOTAL:100%

Final grades submitted to the registrar will be based on the following conversion scale:

A = 92.5 or higher

A-= 87.5 – 92.49

B+ = 82.5 – 87.49

B = 77.5 – 82.49

B-= 72.5 – 77.49

C+ = 67.5 – 72.49

C = 62.5 – 67.49

C-= 57.5 – 62.49

Lecture Schedule

Week 1:

5-Sep-17 Course Organization, Introductions, and Assignments

7-Sept-17Historical and Legal Underpinnings

Essential Readings

Susan Gluck Mezey, Pursuit of Equality: Women, Public Policy, and the Federal Courts. New York: St. Martins Press. 1992. “Chapter 1: The Constitution and Equality,” pp. 8-34.

Susan Gluck Mezey, Pursuit of Equality: Women, Public Policy, and the Federal Courts. New York: St. Martins Press. 1992. “Chapter 2: Equal Employment Opportunity: Title VII- the Formative Years,” pp. 35-54.

Optional Readings:

U.S. Equal Employment Opportunity Commission. Civil Rights Act of 1991,

Wainwright and Holt, “Guidelines for Conducting a Disparity and Availability Study for the Federal DBE Program,” Washington, DC: Transportation Research Board, NCHRP Report #644 2010. Appendix C.

Week 2:

12-Sep-17 Measurement Issues: Disproportionality, Disparity vs. Discrimination

Essential readings

Susan Gluck Mezey, Pursuit of Equality: Women, Public Policy, and the Federal Courts. New York: St. Martins Press. 1992. “Chapter 3: Equal Employment Opportunity: Proving Discrimination,” pp. 54-73.

Recommended Readings:

Myers, Kalar and Lovaton, “Measuring Overconcentration in DBE Compliance,” January 2014.

Disparate Treatment Theory,

Human Resources Guide, Disparate Impact Theory:

Current websites relevant to Civil Rights Act of 1964:

Joseph L. Gastwirth, Weiwei Miao and Qing Pan, “Statistical issues arising in the Kerner v. Denver: a class action disparate impact case,” Law, Probability and Risk (2017) 16, pp 35–53.

Emily Putnam-Hornsteina, Barbara Needell, Bryn and Michelle Johnson-Motoyama, “Racial and ethnic disparities: A population-based examination of risk factors for involvement with child protective services”, Child Abuse & Neglect (37) (1): 33-46.

14-Sep-17

Team #1-1 Critique and Evaluation:

Week 3:

19-Sep-17 Theoretical Explanations: Economics of Discrimination I (Becker Model)

Essential Readings

Gary S. Becker. 1957. “Chapter 1: The Forces Determining Discrimination in the Market Place,” pp. 13-18 in The Economics of Discrimination. Chicago: University of Chicago Press.

William A. Darity, Jr. Ed. 1995. “Introduction,” pp. Xiii-Ii in Economics and Discrimination, Vol 1 (The International Library of Critical Writing in Economics; 57). Aldershot, UK: Edward Elgar Publishing.

Recommended Readings:

William A. Darity, Jr., Ed. 1995. Economics and Discrimination, Vol. 1 (The International Library of Critical Writing in Economics; 57). Aldershot, UK: Edward Elgar Publishing, pp. 183-205.

Ray Marshall. 1974. “The Economics of Racial Discrimination: A Survey,” Journal of Economic Literature 12(3) (September): 849-871.

Charles, Kerwin Kofi, and Jonathan Guryan. "Prejudice and wages: an empirical assessment of Becker’s The Economics of Discrimination." Journal of political economy 116.5 (2008): 773-809.

Assignment Due:Problem Set #1 due in lab on 19-Sep-17 by 1:00 PM

21-Sep-17

Team #2-1 Critique and Evaluation:

Charles, Kerwin Kofi, and Jonathan Guryan. "Prejudice and wages: an empirical assessment of Becker’s The Economics of Discrimination." Journal of political economy 116.5 (2008): 773-809.

Week 4:

26-Oct-17 Economics of Discrimination II (Statistical Discrimination)

Essential Readings

Cain, Glen G. "The economic analysis of labor market discrimination: A survey." Handbook of labor economics Vol (1) (1986): 722-729.

Recommended Readings:

Edmund S. Phelps. 1972. “The Statistical Theory of Racism and Sexism,” The American Economic Review 62(4) (September): 659-61.

Dennis J. Aigner and Glen G. Cain. 1977. “Statistical Theories of Discrimination in Labor Markets,” Industrial and Labor Relations Review 30(2): 175-187.

Kenneth Arrow. 1972. “Some mathematical models of race in the labor market,” pp. 187-204 in A. H. Pascal ed., Racial Discrimination in Economic Life. Lexington, MA: Lexington Books.

Kenneth Arrow. 1973. “The Theory of Discrimination,” pp. 3-33 in O.A. Ashenfelter and A. Rees, eds., Discrimination in Labor Markets. Princeton, N.J.: Princeton University Press.

Kenneth Arrow. 1988. “What Has Economics to Say about Racial Discrimination?” The Journal of Economic Perspectives 12(2) (Spring): 91-100.

Joseph A. Ritter. 2017 “How do police use race in traffic stops and searches? Tests based on observability of race,” Journal of Economic Behavior & Organization, Volume 135, March 2017, Pages 82-98.

Optional Readings:

Joseph G. Altonji and Charles R. Pierret. 2001. “Employer Learning and Statistical Discrimination,” The Quarterly Journal of Economics 116(1) (February): 313-350.

Close, B. and Mason, P.L. (2007), Searching for efficient enforcement: Officer characteristics and racially biased policing, Review of Law and Economics 3, 263-321.

Knowles, J., Persico, N. and Todd, P. (2001), Racial bias in motor vehicle searches: Theory and evidence, Journal of Political Economy 109, 203-29.

28-Oct-17

Team #3-1 Critique and Evaluation:

Week 5:

3-Oct-17 Measurement of Discrimination: Audits

Essential Readings:

James J. Heckman. 1998. “Detecting Discrimination” The Journal of Economic Perspectives, Vol. 12, No. 2., pp. 101-116.

John Yinger. 1986. “Measuring Racial Discrimination with Fair Housing Audits: Caught in the Act” The American Economic Review. Vol. 76, No. 5. pp. 881-893.

“Measuring Housing Discrimination in a National Study: Report of a Workshop” 2002.

Chapter: Appendix B: Audit Studies and Assessment of Discrimination.

John A. List. 2004. “The Nature and Extent of Discrimination in the Marketplace: Evidence From the Field” Quarterly Journal of Economics. 119(1) pp. 49-89.

Uri Gneezy & John A. List. 2004. “Are the Disabled Discriminated Against in Product Markets? Evidence from Field”.

Optional Readings:

Devah Pager & Hana Shepherd. 2008. “The Sociology of Discrimination: Racial Discrimination in Employment, Housing, Credit, and Consumer Markets” Annual Review of Sociology. 34: 181-209.

Are the Disabled Discriminated Against in Product Markets? Evidence from Field Experiments* Uri Gneezy University of Chicago John A. List University of Maryland and NBER 19 March 2004.

Ian Ayres, Fredrick E. Vars and Nasser Zakariya, “To Insure Prejudice: Racial Disparities in Taxicab Tipping,” Yale Law School Legal Scholarship Repository, 2005.

Benjamin Edelman, Michael Luca, and Dan Svirsky, “Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment,”American Economic Journal: Applied Economics 2017, 9(2), pp 1–22.

Assignment Due: Problem Set #2 due in lab on 3-Oct-17 by 1:00 PM

5-Oct-17

Team #4-1 Critique and Evaluation:

Ian Ayres, Fredrick E. Vars and Nasser Zakariya, “To Insure Prejudice: Racial Disparities in Taxicab Tipping,” Yale Law School Legal Scholarship Repository, 2005.

Week 6:

10-Oct-17 Measurement of Discrimination – Linear and Log-linear Models

Essential Readings

Ronald Oaxaca. 1973. “Male-Female Wage Differentials in Urban Labor Markets,” International Economic Review 14(3) (October): 693–709.

Alan S. Blinder. 1995. “Chapter 2: Wage Discrimination: Reduced Form and Structural Estimates,” pp. 20–39 in William A. Darity, Jr., Ed. Introduction, Economics and Discrimination Vol. II. (The International Library of Critical Writing in Economics; 57). Aldershot, UK: Edward Elgar Publishing.

Recommended Readings:

Darity, William A. and Patrick L. Mason. 1998. “Evidence on Discrimination in Employment: Codes of Color, Codes of Gender,” The Journal of Economic Perspectives 12(2) (Spring): 63-90.

Neal, Derek A., and William R. Johnson. "The role of premarket factors in black-white wage differences." Journal of political Economy 104.5 (1996): 869-895.

Neal, D., & Rick, A. (2014). The Prison Boom and the Lack of Black Progress after Smith and Welch (No. 20283). National Bureau of Economic Research, Inc.

Rodgers, W. M., & Spriggs, W. E. (1996). What does the AFQT really measure: Race, wages, schooling and the AFQT score. The Review of Black Political Economy, 24(4), 13-46.

12-Oct-17

Team #5-1 Critique and Evaluation:

Neal, Derek A., and William R. Johnson. "The role of premarket factors in black-white wage differences." Journal of political Economy 104.5 (1996): 869-895.

Week 7:

17-Oct-17 Residual Difference, Linear and Log-linear Models

Essential Readings

Ronald L. Oaxaca and Michael R. Ransom. 1994. “On Discrimination and the Decomposition of Wage Differentials” Journal of Econometrics 61(11) (March).

Ben Jann. “A Stata implementation of the Blinder-Oaxaca decomposition.” The Stata Journal 8(4), 453-479

Recommended Readings:

Oaxaca, R. L., & Ransom, M. R. (1999). Identification in detailed wage decompositions. The Review of Economics and Statistics, 81(1), 154-157.

Cotton, J. (1993). Color or culture? Wage differences among non-Hispanic black males, Hispanic black males and Hispanic white males. The Review of Black Political Economy, 21(4), 53-67.

Bertrand, Marianne, and Kevin F. Hallock. "The gender gap in top corporate jobs." ILR Review 55.1 (2001): 3-21.

Assignment Due:Problem Set #3 due in lab on 17-Oct-17 by 1:00 PM

19-Oct-17

Team #1-2 Critique and Evaluation:

Bertrand, Marianne, and Kevin F. Hallock. "The gender gap in top corporate jobs." ILR Review 55.1 (2001): 3-21.

Week 8:

24-Oct-17 Nonlinear Residual Difference Methods

Essential Readings

Robert W. Fairlie. 2006. “An extension of the Blinder-Oaxaca Decomposition Technique to Logit and Probit Models” IZA Discussion Paper Series.

Helen Skyt Nielson. 1998. “Discrimination and Detailed Decomposition in a Logit Model,” Economics Letters 61(1): 115–120.