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Suppose we are interested in whether minority groups are being treated differently in the labor mar- ket. Y; is the individual i's hourly wage,

Suppose we are interested in whether minority groups are being treated differently in the labor mar- ket. Y; 

Suppose we are interested in whether minority groups are being treated differently in the labor mar- ket. Y; is the individual i's hourly wage, and M; is the binary variable to indicate whether the indi- vidual belongs to the minority group or not. Can we use the following equation to study whether minority groups are being treated differ- ently? Why? Yi Bo + BM; + Could you describe what the audit and correspondence methods are? Why these two methods can solve the issues in part (a)? What's the limitation of audit and correspondence methods? Could you explain some potential sources of discrimination?

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Solution a The equation Y 60 B1M 6 is not suitable for studying whether minority groups are being treated differently in the labor market because it assumes a constant difference in wages between mino... blur-text-image

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