Systemic Discrimination: Theory and Measurement

Economics often defines and measures discrimination as disparities stemming from direct effects of group identity. We develop new tools to model and measure systemic discrimination, defined as disparities stemming from differences in non-group characteristics. Systemic discrimination can arise from differences in signaling technologies and opportunities for skill development. We propose a measure based on a decomposition of total discrimination into direct and systemic components. The measure is illustrated in a series of hiring experiments and a novel Iterated Audit experimental paradigm with real hiring managers. Results highlight how direct discrimination in one domain can drive systemic discrimination in other domains.