Was There Age Discrimination?

In this assignment, you must decide whether to be the attorney for some senior workers who have claimed that they were laid off due to their age.  The company  came on some hard times and needed to lay off some workers.  You can also choose to be the attorney for the company.  You must consider the likely strategy of the other side.  It is good in this case to consider the timing of the strategy - from a simple analysis to the more complicated.

You should approach this question as follows:

1) Is there a prima facie case for discrimination? (Is there a significant difference in the layoff rates for the covered and uncovered group?)  This requires a simple analysis that computes layoff percentage for two groups.  You must decide how to define the groups (40+?, 43+?) or you can look at every possible definition of a group (using cutoffs at EVERY age).  This is a comparison of percentages between two groups.  The correct statistic to use is the Z-stat.  However, people often use a t-statistic when the Z is unavailable.  The Z is available if you have the Prentice Hall add-in for EXCEL.  If not, you can go to TOOLS-DATA ANALYSIS and choose the t-stat.  If you use the z-statistic within EXCEL, you will need to first compute the variance.  The variance of a proportion is equal to p*(1-p), where p is the proportion in the whole sample.  Use this computation as the variance for groups 1 and 2.  The hypothesized difference of proportions in the two groups is zero.  You will need to sort the data so that the older group is group 1 and the younger group is group 2.  If you use the t-stat, EXCEL will estimate the variance for you.  Since you hypothesize that the older group is laid off at a higher rate than the younger group (this is your alternative hypothesis), you should use a 1-tail test.  It is typical for courts to accept a 5% significance level when evaluating statistical results.

2) If the answer to 1) is "yes," is there any indication that a valid evaluation of performance was made that was the actual basis for the layoff?  You can investigate the relationship between performance and age and layoff using regression analysis with layoff (0,1) as the dependent variable and your age group indicator (0,1) and performance rating (1-7) as your independent variables.  Alternatively, you can do a pivot table with the average of layoff as your variable inside the table and age group as the columns and performance as the rows and view the results.  Are there examples in the data that favor one explanation (age discrimination) over the other (layoff for cause)?  (LOOK AT THE DATA, YOU ONLY HAVE A FEW OBSERVATIONS!) You can also look at the individual data and see "who" was laid off.  Can you determine if the data favor a "performance-based" layoff as opposed to an age-based layoff?

3) What do think this case will ultimately hinge on?

The data file is available in EXCEL and Stata format.  The file contains information on the employee's age, gender and performance rating as well as a variable indicating whether or not the employee was laid off.  

You should present your results with some statistical analysis, as well as some charts.

This assignment is to give you an idea what might happen in a legal case where you are being sued for discrimination.  Think about it from both the management and the worker perspective.