- Explain how a confidence interval is related to a two-sided hypothesis test.
Labor Market Discrimination
Recall the 2004 study by two University of Chicago economists who wanted to test for labor market discrimination. The investigators created [latex]4,890[/latex] mock identical resumés, which were sent to job placement ads in Chicago and Boston. To gauge market racial discrimination, each resumé was randomly assigned either a commonly-white or commonly-black name. The experimenters then measured the proportion of resumés from each group (white and black) that received callbacks.
The results are summarized in the following table:
| Commonly-White Names | Commonly-Black Names | Total | |
| Called back | [latex]246[/latex] | [latex]164[/latex] | [latex]410[/latex] |
| Not called back | [latex]2199[/latex] | [latex]2281[/latex] | [latex]4480[/latex] |
| Total | [latex]2445[/latex] | [latex]2445[/latex] | [latex]4890[/latex] |
Let [latex]p_1[/latex]= true proportion of commonly-white named resumés that receive a callback.
Let [latex]p_2[/latex]= true proportion of commonly-black named resumés that receive a callback.