Abigail Wozniak, 24 May 2014

There is concern that worker screening may aggravate discrimination against disadvantaged groups, but its effects may be counterintuitive. This column presents recent evidence on the effect of drug testing on hiring practices by race in the US. Removing this channel of information asymmetry allows employers to distinguish workers by this relevant characteristic rather than relying on their priors; the result is that hiring of non-drug-using African-Americans increases, at the expense of white women.

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