Collective Reputation and the Dynamics of Statistical Discrimination

Loury, Glenn C.; Kim, Young‐Chul

doi:10.2139/ssrn.2429298

Cited by 3 publications

References 16 publications

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A Short-term Intervention for Long-term Fairness in the Labor Market

Chen

2018

Proceedings of the 2018 World Wide Web Conference on World Wide Web - WWW '18

128

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The persistence of racial inequality in the U.S. labor market against a general backdrop of formal equality of opportunity is a troubling phenomenon that has significant ramifications on the design of hiring policies. In this paper, we show that current group disparate outcomes may be immovable even when hiring decisions are bound by an input-output notion of "individual fairness." Instead, we construct a dynamic reputational model of the labor market that illustrates the reinforcing nature of asymmetric outcomes resulting from groups' divergent accesses to resources and as a result, investment choices. To address these disparities, we adopt a dual labor market composed of a Temporary Labor Market (TLM), in which firms' hiring strategies are constrained to ensure statistical parity of workers granted entry into the pipeline, and a Permanent Labor Market (PLM), in which firms hire top performers as desired. Individual worker reputations produce externalities for their group; the corresponding feedback loop raises the collective reputation of the initially disadvantaged group via a TLM fairness intervention that need not be permanent. We show that such a restriction on hiring practices induces an equilibrium that, under particular market conditions, Pareto-dominates those arising from strategies that statistically discriminate or employ a "group-blind" criterion. The enduring nature of equilibria that are both inequitable and Pareto suboptimal suggests that fairness interventions beyond procedural checks of hiring decisions will be of critical importance in a world where machines play a greater role in the employment process.

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A Short-term Intervention for Long-term Fairness in the Labor Market

Chen

2018

Proceedings of the 2018 World Wide Web Conference on World Wide Web - WWW '18

128

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How Does Collective Reputation Affect Hiring? Selection and Sorting in an Online Labour Market

2015

SSRN Journal

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How does collective reputation affect hiring and selection into jobs? Using detailed hiring data from a global online labour market, where the country of residence is the salient group characteristic, we document a mechanism through which collective reputation can perpetuate initial group inequality. Using an instrumental variable strategy, we first identify reputational externalities between an employer's very first hire and the propensity to contract more workers from the same country. Employers, contingent on their first worker's performance (as measured by a public rating), go on to almost exclusively hire from the same country. This coincides with a strong and positive supply-side sorting response: Observing their predecessor's success, workers from the same country are more likely to apply and tend to be of higher quality. Employers, facing better applicants, are in turn more likely to continue providing top ratings for later hires from the first hire country. Collective reputation hence appears to serve as a coordination device that enables workers to positively sort with employers: Good workers then attract more good workers from the same country and vice versa. JEL codes: J7, J16, L14 * I am indebted to Oriana Bandiera and Robin Burgess for their supervision and continued guidance. I

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Fairness at Equilibrium in the Labor Market

Hu¹

2017

Preprint

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Recent literature on computational notions of fairness has been broadly divided into two distinct camps, supporting interventions that address either individual-based or group-based fairness. Rather than privilege a single de nition, we seek to resolve both within the particular domain of employment discrimination. To this end, we construct a dual labor market model composed of a Temporary Labor Market, in which rm strategies are constrained to ensure group-level fairness, and a Permanent Labor Market, in which individual worker fairness is guaranteed. We show that such restrictions on hiring practices induces an equilibrium that Paretodominates those arising from strategies that employ statistical discrimination or a "group-blind" criterion. Individual worker reputations produce externalities for collective reputation, generating a feedback loop termed a "self-ful lling prophecy. " Our model produces its own feedback loop, raising the collective reputation of an initially disadvantaged group via a fairness intervention that need not be permanent. Moreover, we show that, contrary to popular assumption, the asymmetric equilibria resulting from hiring practices that disregard group-fairness may be immovable without targeted intervention. e enduring nature of such equilibria that are both inequitable and Pareto ine cient suggest that fairness interventions are of critical importance in moving the labor market to be more socially just and e cient.

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Collective Reputation and the Dynamics of Statistical Discrimination

Cited by 3 publications

References 16 publications

A Short-term Intervention for Long-term Fairness in the Labor Market

A Short-term Intervention for Long-term Fairness in the Labor Market

How Does Collective Reputation Affect Hiring? Selection and Sorting in an Online Labour Market

Fairness at Equilibrium in the Labor Market

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