Ethnic markets

Kevin Lewis

March 26, 2015

What's in a Name? Mutual Fund Flows When Managers Have Foreign-Sounding Names

Alok Kumar, Alexandra Niessen-Ruenzi & Oliver Spalt
Review of Financial Studies, forthcoming

We show that name-induced stereotypes affect the investment choices of U.S. mutual fund investors. Managers with foreign-sounding names have about 10% lower annual fund flows, and this effect is stronger among funds with investor clienteles more likely to be suspicious of foreigners. Foreign-named managers experience lower appreciation (greater decline) in flows following good (bad) performance. Following 9/11, flows to funds with managers with Middle-Eastern-sounding names declined abnormally. In an experimental setting in which skill differences are absent, individuals allocate 11% less money to an index fund managed by a foreign-named manager. This gap widens following the Boston marathon bombings.


The Black-White Wage Gap Among Young Women in 1990 vs. 2011: The Role of Selection and Educational Attainment

James Albrecht, Aico van Vuuren & Susan Vroman
Labour Economics, April 2015, Pages 66–71

In this paper, we compare the black-white median log wage gap for women aged 26–31 in 1990 and 2011. Two stylized facts emerge. First, the pattern of selection in the two years is similar – the gaps observed among women employed in 1990 and 2011 substantially understate the gaps that would have been observed had all 26–31 year-old women been working in those years. Second, both the median log wage gap observed in the data and the selection-corrected gap increased substantially between the two years, a fact that can be mostly attributed to changes in the distributions of educational attainment among young black and white women.


Bank Deregulation and Racial Inequality in America

Ross Levine, Yona Rubinstein & Alexey Levkov
Critical Finance Review, 2014, Pages 1-48

We use the cross-state, cross-time variation in bank deregulation across the U.S. states to assess how improvements in banking systems affected the labor market opportunities of black workers. Bank deregulation from the 1970s through the 1990s improved bank efficiency, lowered entry barriers facing nonfinancial firms, and intensified competition for labor throughout the economy. Consistent with Becker's (1957) theory of racial discrimination, we find that in economies where employers have sufficiently strong racial biases, deregulation-induced improvements in the banking system boosted black workers' relative wages by facilitating the entry of new firms and reducing the manifestation of racial prejudices in labor markets.


Criminal stigma, race, and ethnicity: The consequences of imprisonment for employment

Scott Decker et al.
Journal of Criminal Justice, March–April 2015, Pages 108–121

Purpose: The purpose of this paper is to assess the role of race/ethnicity and prior prison sentences on employment opportunities. Secondarily, we compare the impact of applying for jobs (in-person and online), and the role of education in securing employment. This work was conducted in a large southwestern city (Phoenix AZ) with high rates of imprisonment for blacks and Hispanics.

Methods: First, an audit test involving matched pairs of males within race/ethnicity categories (black, Hispanic, white) who applied for jobs in-person was conducted. More than 500 jobs were applied for by the audit testers. Second, a correspondence test was conducted using three pairs of résumés matched within race/ethnicity. In the correspondence test, over 3,000 jobs were applied for online. Each test used random assignment. Because of its importance for entry level employment, a separate analysis of food service jobs applied for online was conducted.

Results: Both sets of analyses were completed using cross-classified random effects (CCRE) models. Contrary to expectations, neither race/ethnicity nor prior prison record affected outcomes in the online application process. In contrast, both race/ethnicity and prison record had significant effects in the in-person audit analysis. The effect of a prison record was particularly strong for blacks.

Conclusions: Race/ethnicity and prior prison sentence remain important impediments to success in gaining employment. These results are particularly strong for in-person job applications and are somewhat smaller for online job applications.


Accounting for the Gap: A Firm Study Manipulating Organizational Accountability and Transparency in Pay Decisions

Emilio Castilla
Organization Science, forthcoming

Great progress has been made in documenting how employer practices may shape workplace inequality. Less research attention, however, has been given to investigating which organizational strategies are effective at addressing gender and racial inequality in labor markets. Using a unique field study design, this article identifies and tests, for the first time, whether accountability and transparency in pay decisions — two popular organizational initiatives discussed among scholars and practitioners — may reduce the pay gap by employee gender, race, and foreign nationality. Through a longitudinal analysis of a large private company, I study the performance-based reward decisions concerning almost 9,000 employees before and after high-level management adopted a set of organizational procedures, introducing accountability and transparency into the company’s performance-reward system. Before such procedures were introduced, there was an observed gap in the distribution of performance-based rewards where women, ethnic minorities, and non-U.S.-born employees received lower monetary rewards compared with U.S.-born white men having the same performance evaluation scores and working in the same job and work unit with the same manager and the same human capital characteristics. Analyses of the company’s employee performance-reward data after the adoption of accountability and transparency procedures show a reduction in this pay gap. I conclude by discussing the implications of this study for future research about employer strategies targeting workplace inequality and diversity.


Is There A Taste For Racial Discrimination Among Employers?

Alex Bryson & Arnaud Chevalier
Labour Economics, forthcoming

Research on employers’ hiring discrimination is limited by the unlawfulness of such activity. Consequently, researchers have focused on the intention to hire. Instead, we rely on a virtual labour market, the Fantasy Football Premier League, where employers can freely exercise their taste for racial discrimination in terms of hiring and firing. The setting allows us to eliminate co-worker, consumer-based and statistical discrimination as potential sources of discrimination, thus isolating the effect of taste-based discrimination. We find no evidence of racial discrimination, either in initial hiring or through the season, in a context where employers are fully aware of current and prospective workers’ productivity.


Walk the Walk but Don't Talk the Talk: The Strategic Use of Color-Blind Ideology in an Interracial Social Movement Organization

Angie Beeman
Sociological Forum, March 2015, Pages 127–147

In this study, I examine the strategies interracial organizations use in the twenty-first century, where color-blind ideology dominates. Much theoretical work on racism examines how it has evolved during different historical periods, but this work does not address how these changing forms of racism affect social movement organizations, particularly those on the left. While the literature on color-blind ideology has examined how it is expressed by African Americans and European Americans separately, my work investigates how color-blind ideology operates when European Americans and people of color are working together in the same organizational setting. Studies of social movements have examined how organizational culture affects strategies but have neglected how external racist culture and color-blind ideology impacts organizational strategies. Findings from 3 years of ethnographic data collected on an interracial social movement organization and its corresponding coalition suggest that activists in interracial organizations use racism evasiveness strategically to maintain solidarity. I conceptualize racism evasiveness as the action resulting from color-blind ideology within a larger system of racism. While activists perceive advantages to these strategies, there are also long-term negative consequences. Without explicitly naming and addressing racism, progressive organizations may be limited in their ability to challenge systemic racism.


Racial Discrimination in the Labor Market for Recent College Graduates: Evidence from a Field Experiment

John Nunley et al.
B.E. Journal of Economic Analysis & Policy, forthcoming

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.


Pocketbook Prejudice? Exploring Economic Determinants of Prejudice Toward Chinese

Laura Silver
International Journal of Public Opinion Research, Spring 2015, Pages 71-89

This article examines causes for prejudice toward Chinese, focusing on whether economic attitudes — both sociotropic and personal — affect prejudice. Using a nationally representative sample of American workers, I find prejudice toward Chinese is related in part to personal economic interest. This finding contrasts with other studies of prejudice that have focused on sociotropic explanations. Leveraging a comparison with prejudice toward Canadians, I argue that this may be in part because of how the media frame China.


Understanding Diversity: The Importance of Social Acceptance

Jacqueline Chen & David Hamilton
Personality and Social Psychology Bulletin, April 2015, Pages 586-598

Two studies investigated how people define and perceive diversity in the historically majority-group dominated contexts of business and academia. We hypothesized that individuals construe diversity as both the numeric representation of racial minorities and the social acceptance of racial minorities within a group. In Study 1, undergraduates’ (especially minorities’) perceptions of campus diversity were predicted by perceived social acceptance on a college campus, above and beyond perceived minority representation. Study 2 showed that increases in a company’s representation and social acceptance independently led to increases in perceived diversity of the company among Whites. Among non-Whites, representation and social acceptance only increased perceived diversity of the company when both qualities were high. Together these findings demonstrate the importance of both representation and social acceptance to the achievement of diversity in groups and that perceiver race influences the relative importance of these two components of diversity.


Are companies beholden to bias? The impact of leader race on consumer purchasing behavior

Derek Avery et al.
Organizational Behavior and Human Decision Processes, forthcoming

Given that racial stereotypes often influence leader appraisals, many businesses assume consumers will respond unfavorably to Black leaders. Recent research, however, suggests observers may suppress negative stereotypes of Black leaders when they head high-performing organizations. We integrate theory on implicit leadership and motivated social cognition to better understand how leader stereotype application and suppression influence consumer purchasing behavior. Across archival studies, a classroom exercise, and an experiment, we found that customers (real and prospective) appraised Black leaders less favorably than White leaders, resulting in lower patronage only when motivated to view leaders stereotypically. Namely, significant consumer bias against companies with Black leaders emerged only when organizational failure was accompanied by (a) unfamiliarity with the leader(s) in question, (b) greater societal acceptance of racist behavior (i.e., in the past), or (c) high consumer desire to bask-in-reflected-glory of an organization.


Being part of diversity. The effects of an all-inclusive multicultural diversity approach on majority members’ perceived inclusion and support for organizational diversity efforts

Wiebren Jansen, Sabine Otten & Karen van der Zee
Group Processes & Intergroup Relations, forthcoming

In two experiments we tested how explicitly including the cultural majority group in an organization’s diversity approach (all-inclusive multiculturalism) affects the extent to which majority members feel included in the organization and support organizational diversity efforts. In Study 1 we focused on prospective employees. We found that an all-inclusive diversity approach, compared with the “standard” multicultural approach in which the majority group is not explicitly made part of organizational diversity, led to higher levels of anticipated inclusion for those with a high need to belong. In Study 2 we turned to sitting organizational members. Here, we again found that an all-inclusive multicultural approach increased perceptions of inclusion, but now the effect was present regardless of individual levels of need to belong. Perceived inclusion, in turn, was positively related to majority members’ support for organizational diversity efforts. Together, these findings underline the effectiveness of an all-inclusive multicultural approach towards diversity.


Who Should We Help? An Experimental Test of Discrimination in the British Welfare State

Robert Ford
Political Studies, forthcoming

The impact of immigration and rising ethnic diversity on support for the welfare state has been the subject of intense debate. Previous European research has found little evidence for an aggregate impact of diversity on support for welfare, but has not tested for discrimination between claimants at the individual level. This article presents two survey experiments which demonstrate that, in the ethnically diverse, high immigration British context, white majority respondents favour co-ethnic welfare claimants over foreign-born or ethnically different claimants. Both race and migrant status trigger discrimination, and the impact of these is cumulative, so a foreign-born Muslim claimant suffers a ‘double disadvantage’. Three mechanisms contribute to discrimination. Ethnocentrism reduces willingness to support minority welfare claimants, but not co-ethnic claimants. Economic insecurity increases support for co-ethnic welfare claimants, but not minority claimants. The perception that welfare claimants are generally undeserving of help has a larger negative impact on minority claimants than on co-ethnic claimants.


Pigmentocracies: Educational Inequality, Skin Color and Census Ethnoracial Identification in Eight Latin American Countries

Edward Telles, René Flores & Fernando Urrea-Giraldo
Research in Social Stratification and Mobility, June 2015, Pages 39–58

For the first time, most Latin American censuses ask respondents to self-identify by race or ethnicity allowing researchers to examine long-ignored ethnoracial inequalities. However, reliance on census ethnoracial categories could poorly capture the manifestation(s) of race that lead to inequality in the region, because of classificatory ambiguity and within-category racial or color heterogeneity. To overcome this, we modeled the relation of both interviewer-rated skin color and census ethnoracial categories with educational inequality using innovative data from the 2010 America's Barometer from the Latin American Public Opinion Project (LAPOP) and 2010 surveys from the Project on Ethnicity and Race in Latin America (PERLA) for eight Latin American countries (Bolivia, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico and Peru). We found that darker skin color was negatively and consistently related to schooling in all countries, with and without extensive controls. Indigenous and black self-identification was also negatively related to schooling, though not always at a statistically significant and robust level like skin color. In contrast, results for self-identified mulattos, mestizos and whites were inconsistent and often counter to the expected racial hierarchy, suggesting that skin color measures often capture racial inequalities that census measures miss.


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