Labour Market Discrimination: Method and Measurement

We review the most common methods that have been used to detect discrimination, and their pros and cons. One approach is to compare outcomes of workers from different groups using observational data. Since this is not unproblematic, field experiments have become the most used tool to collect evidence of discrimination in the labor market.  In such experiments, fictitious job applications are sent to real employers with vacant jobs. Other types of studies are natural experiments, made possible by a change in society that occur naturally, or lab experiments. The latter might be less like real-life situations but are far more superior than other types of studies when it comes to testing theories.