No abstract

We present experimental evidence from a correspondence test of racial discrimination in the labor market for recent college graduates. We find strong evidence of differential treatment by race: black applicants receive approximately 14% fewer interview requests than their otherwise identical white counterparts. The racial gap in employment opportunities is larger when comparisons are made between job seekers with credentials that proxy for expected productivity and/or match quality. Moreover, the racial discrimination detected is driven by greater discrimination in jobs that require customer interaction. Various tests for the type of discrimination tend to support taste-based discrimination, but we are unable to rule out risk aversion on the part of employers as a possible explanation.

The authors use data from a résumé audit to estimate the impact of unemployment and underemployment on the employment prospects of recent college graduates. They find no statistical evidence linking unemployment spells of different durations to employment opportunities. by contrast, college graduates who are underemployed have callback rates that are 30% lower than those of applicants who are adequately employed. The null effects associated with unemployment and the adverse effects associated with underemployment are robust across cities with relatively tight and loose labor-market conditions. Internship experience obtained while completing one's degree substantially reduces the negative effects of underemployment. The data support the proposition that employers view underemployment as a strong signal of lower expected productivity.