  The persistence of racial inequality in the U.S. labor market against a
general backdrop of formal equality of opportunity is a troubling phenomenon
that has significant ramifications on the design of hiring policies. In this
paper, we show that current group disparate outcomes may be immovable even when
hiring decisions are bound by an input-output notion of "individual fairness."
Instead, we construct a dynamic reputational model of the labor market that
illustrates the reinforcing nature of asymmetric outcomes resulting from
groups' divergent accesses to resources and as a result, investment choices. To
address these disparities, we adopt a dual labor market composed of a Temporary
Labor Market (TLM), in which firms' hiring strategies are constrained to ensure
statistical parity of workers granted entry into the pipeline, and a Permanent
Labor Market (PLM), in which firms hire top performers as desired. Individual
worker reputations produce externalities for their group; the corresponding
feedback loop raises the collective reputation of the initially disadvantaged
group via a TLM fairness intervention that need not be permanent. We show that
such a restriction on hiring practices induces an equilibrium that, under
particular market conditions, Pareto-dominates those arising from strategies
that statistically discriminate or employ a "group-blind" criterion. The
enduring nature of equilibria that are both inequitable and Pareto suboptimal
suggests that fairness interventions beyond procedural checks of hiring
decisions will be of critical importance in a world where machines play a
greater role in the employment process.
