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Car Ownership and the Labour Market of Ethnic Minorities

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  • Gautier, Pieter A
  • Zenou, Yves

Abstract

We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labour-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the initial wealth difference, blacks cannot afford cars while whites can. Car ownership allows whites to reach more jobs per unit of time and this gives them a better bargaining position. As a result, in equilibrium, blacks end up with both higher unemployment rates and lower wages than whites. Furthermore, it takes more time for blacks to reach their jobs even though they travel less miles. Those predictions are consistent with the data. Better access to capital markets or better public transportation will reduce the differences in labour market outcomes.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7061.

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Date of creation: Nov 2008
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Handle: RePEc:cpr:ceprdp:7061

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Keywords: ethnic minorities; job search; multiple job centres; spatial labour markets; Transportation mismatch;

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Cited by:
  1. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers 0120, Spatial Economics Research Centre, LSE.
  2. Rupert, Peter & Stancanelli, Elena G. F. & Wasmer, Etienne, 2009. "Commuting, Wages and Bargaining Power," IZA Discussion Papers 4510, Institute for the Study of Labor (IZA).
  3. Gobillon, Laurent & Rupert, Peter & Wasmer, Etienne, 2013. "Ethnic Unemployment Rates and Frictional Markets," CEPR Discussion Papers 9507, C.E.P.R. Discussion Papers.
  4. Olof Aslund & John Osth & Yves Zenou, 2009. "How Important is Access to Jobs? Old Question - Improved Answer," CReAM Discussion Paper Series 0925, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  5. Zenou, Yves, 2007. "Search in Cities," CEPR Discussion Papers 6197, C.E.P.R. Discussion Papers.
  6. Vincent Boitier, 2013. "Endogenous city size in urban search models: the case of high reallocation costs," ERSA conference papers ersa13p590, European Regional Science Association.
  7. repec:spo:wpecon:info:hdl:2441/10031 is not listed on IDEAS
  8. Ellickson, Paul B. & Grieco, Paul L.E., 2013. "Wal-Mart and the geography of grocery retailing," Journal of Urban Economics, Elsevier, vol. 75(C), pages 1-14.
  9. Zenou, Yves, 2009. "Urban search models under high-relocation costs. Theory and application to spatial mismatch," Labour Economics, Elsevier, vol. 16(5), pages 534-546, October.
  10. Deokrye Baek, . "The Effect of Public Transportation Accessibility on Food Insecurity," Departmental Working Papers 2013-02, Department of Economics, Louisiana State University.
  11. Yip, Chi Man, 2011. "Size and The City: Productivity, Match Quality and Wage Inequality," MPRA Paper 31255, University Library of Munich, Germany.
  12. Mikhed, Vyacheslav & Scholnick, Barry, 2014. "Financial benefits, travel costs, and bankruptcy," Working Papers 14-18, Federal Reserve Bank of Philadelphia.

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