This paper develops a new test for identifying racial bias in the context of bail decisions –a high-stakes setting with large disparities between white and black defendants. We motivate our analysis using Becker’s (1957) model of racial bias, which predicts that rates of pre-trial misconduct will be identical for marginal white and marginal black defendants if bail judges are racially unbiased. In contrast, marginal white defendants will have a higher probability of misconduct than marginal black defendants if bail judges are racially biased against blacks. To test the model, we develop a new estimator that uses the release tendencies of quasi-randomly assigned bail judges to identify the relevant race-specific misconduct rates. Estimates from Miami and Philadelphia show that bail judges are racially biased against black defendants, with substantially more racial bias among both inexperienced and part-time judges. We also find that both black and white judges are biased against black defendants. We argue that these results are consistent with bail judges making racially biased prediction errors, rather than being racially prejudiced per se.
I study the impact of privatization of state-owned enterprises (SOEs) on workers at privatized SOEs
and on the aggregate labor market. Using a matched employer-employee dataset, I find privatization
in Brazil between 1996-2000 lowered incumbent workers’ wages by a substantial 30 log points relative
to a matched control group. Half of this decline is due to privatized workers facing an increased risk
of displacement and moving to lower-paying establishments, while half is due to within-establishment
wage changes. The direct impacts understate the total cost of privatization to workers in the presence
of general equilibrium spillovers. To estimate spillovers on private-sector labor markets, I construct
an exposure to privatization measure that depends on the transition probability between jobs in a given
labor market and jobs in privatized SOEs. I find wages decline in labor markets that are more exposed
to privatization relative to those that are less exposed. A summary calculation suggests that privatization
decreased the aggregate wage in the formal sector of the Brazilian labor market by 4.5 log points, with
about one-quarter of this effect attributable to the direct effect on privatized workers and three-quarters
attributable to spillovers.