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October 15, 2009
Study Examines How Race Plays a Role in Hiring Decisions

A recent study found that the race or ethnicity of managers who make hiring decisions can have a strong effect in the racial makeup of a company's workforce.

The study was conducted using data from a large retail chain. The researchers looked at stores that had a change in managers so that they could compare hiring patterns of managers.

"This means we can compare the hiring patterns of consecutive managers of different races in the same store," says Laura Giuliano of the University of Miami, who authored the study with David Levine and Jonathan Leonard from the University of California, Berkeley. "Hence, we can isolate the effect of a manager's race by comparing the hiring patterns of managers when they hire from similar labor pools under similar conditions."

The study found that when a black manager in a typical store is replaced by a white, Asian or Hispanic manager, the share of newly hired black employees falls from 21 to 17 percent. By contrast, the share of white workers hired rises from 60 to 64 percent. In the South, the replacement of a black manager causes the share of newly hired black employees to fall from 29 to 21 percent.

The researchers also examined possible explanations for the differences in hiring patterns. They found that all managers tend to hire people who live close to them. Therefore, if black managers live in predominantly black neighborhoods, their hiring network is also likely to be predominantly black.

The researchers also said that their research also suggests that black managers hire fewer whites because whites may be less willing to work for black managers. The study found that when a white manager is replaced with a black manager, the rate at which white workers quit their jobs increases by 15 percent.

"We interpret this increase in the white quit rate as evidence of discriminatory sorting by white job seekers," the authors write. "It implies that whites who dislike working for black managers often avoid working for black managers in the first place."

The study appears in the Journal of Labor Economics.