A matter of degrees: Educational credentials and race and gender discrimination in the labor market

Racial and gender inequality in economic outcomes, particularly among the college educated, persists throughout U.S. society. Scholars debate whether this inequality stems from differences in human capital (e.g. college selectivity, GPA, major) or employer discrimination on the basis of race and gender. However, limited measures of human capital and the inherent difficulties in measuring discrimination using observational data make determining the cause of these differences in labor market outcomes a difficult endeavor. This research examines employment opportunities for hypothetical graduates of elite top-ranked universities versus less selective institutions. I use an experimental computerized audit design to create matched candidate pairs and apply for 1,008 jobs on a national job search website. The results show that although a credential from an elite university results in more call-backs for all candidates, black candidates from elite universities only do as well as white candidates from less selective universities. Moreover, race results in a double penalty: when employers respond to black candidates it is for jobs with lower starting salaries and of lower quality than those of white peers. These racial differences in response rates and starting salary ranges suggest that a bachelor's degree, even one from an elite institution, cannot fully counteract the importance of race in U.S. society. Although gender differences are not statistically significant, race and gender interact to create a tiered system of opportunities. Finally, the results suggest that college major selection plays a critical role for black but not female candidates. Overall this research finds that both racial discrimination and differences in human capital contribute to economic inequality.