Adding race and ethnicity to microeconomic databases: An assessment of alternative options

Abstract Estimating differences between racial/ethnic groups often requires merging demographic variables from one dataset to variables of interest in another. A common method merges Home Mortgage Disclosure Act data to property databases. One alternative is to acquire this information from voter registration files; another is to predict race with a name‐based algorithm. Compared to Census data, which method is more representative varies by location and group. We explore the practical implications of each method by using the matched samples in two empirical applications. Researchers can arrive at different conclusions about racial/ethnic disparities depending on the method selected.