-Firms can rationally choose to use group characteristics to predict applicants’ productive capacity: If the cost of information about individual applicants is high (relative to the benefits), it is rational to hire, promote, or pay based on group characteristics. oThis is only economically rational. oNot right, or moral, or legal. Keynesian Liberals -Government role in job creation. Audit Studies -Liberal economists point to audit studies to argue that statistical discrimination is real, significant and persistent. -There are two main kinds of audit studies, in-person audits, and correspondence tests. In-person audits are conducted by recruiting auditors, participants of the study who will take the role of job applicants or housing customers. There auditors are then provided with carefully constructed resumes and histories coached in interviewing and paired with one another. During the research process auditors are debriefed and continuously coached on better matching their performances. Discrimination can then be directly experienced and
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