In a seminal study, researchers documented race-based hiring in the Boston and Chicago labor markets (American Economic Review, September 2004). They sent out identical resumes to employers, half with traditionally African-American names and the other half with traditionally Caucasian names. Interestingly, there was a 53% difference in call-back rates between the two groups of people. A research fellow at an institute in Santa Barbara decides to repeat the same experiment with names along with age in the Los Angeles labor market. She repeatedly sends out resumes for sales positions in the city that are identical except for the difference in the names and ages of the applicants.

She also records the call-back rate for each candidate. The accompanying table shows a portion of the data on call-back rate (%), age, and a dummy variable Caucasian that equals 1 for a Caucasian-sounding name; the entire data set, labeled Hiring, can be found on the text website.

a. Estimate a linear regression model with Call-back as the response variable, and Age and Caucasian as the explanatory variables.
b. Conduct a test for race discrimination at the 5% significance level.
c. Construct the 95% confidence interval for the mean call-back rate for a 30-year-old applicant with a Caucasian-sounding name. Find the corresponding confidence interval for the applicant without a Caucasian-soundingname.

Transcribed Image Text:

Call-back Age Caucasian 12 56 15 38