In employment discrimination cases, courts have held that there is proof of disc
ID: 2950829 • Letter: I
Question
In employment discrimination cases, courts have held that there is proof of discrimination when the percentage of blacks among a firm's employees is lower than the percentage of blacks in surrounding geographical region, provided the difference is "statistically significant" by the z-test. Suppose that in one city, 10% of the people are black. Suppose too that every firm in the city hire employees by a process which, as as race is concerned, is equivalent to simple random sampling. Would any of these firms ever be found guilty of discrimination by the z-test? Explain briefly.Explanation / Answer
A significantly significant result from a z-test simply means thatthe odds of seeing a result that extreme or more extreme is lessthan or equal to , the level of significance. If this is a two-sided test, then there is an /2% chance ofthe firm being found guilty of discriminating against blacks. Conversely, there is also an /2% chance of the firm beingfound guilty of discriminating against non-blacks. If this is a one-sided test (testing for discrimination againstblacks), there would be an % chance of a firm being foundguilty of discriminating against blacks. Therefore, while the probability would be small (either or/2 depending on the type of test), it would still be possiblefor a firm that makes no consideration of race in hiring decisionsto be found guilty of discrimination.