This study is a bit too complex, and I am not quite sure what the results really mean. The main finding is that firms that perform criminal background checks are more likely to hire African American workers.
The findings of this study are several. To begin, the empirical estimates indicate that employers who perform criminal background checks are more likely to hire black applicants than employers that do not. This positive association remains even after adjusting for an establishment's spatial proximity to black residential areas and for the proportion of applications that come from African Americans. In the context of the theoretical arguments discussed above, this positive net effect indicates that the adverse consequence of employer-initiated background checks on the likelihood of hiring African Americans is more than offset by the positive effect of eliminating statistical discrimination. To be sure, the group of workers who are excluded by a background check are surely different from the group of workers who are harmed by incorrect perceptions regarding their criminal histories. In other words, behind the net changes are two offsetting gross effects that impact the welfare of alternative groups of African American workers.
There are all kinds of issues here, including racial biases, educational issues, self-selection issues, to name a few. Are blue collar job applicants more likely to be screened for criminal histories? Are blacks more likely to apply for these types of jobs? Are managers of blue collar workers more likely to discriminate? I don't know the answers to these questions. And while some of these issues are addressed in the study, it seems that clear cut answers and explanations are still fleeting.
The authors however, make a good point about the policy implications of this study.
"Calls to seal criminal history records fail to take into account this unintended consequence," write the authors. "The results of this study suggest that curtailing access to criminal history records may actually harm more people than it helps and aggravate racial difference in labor market outcomes."
That may be true, but the people pushing for sealed criminal histories might value idealism over pragmatism. Yet another reason that you can't ignore second order effects.