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Does Wealth Explain Black-White Differences In Early Employment Careers?

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  • Sílvio Rendon

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Abstract

This paper inquires on the effect of initial wealth in racial differences in early employment careers. I set up a dynamic model in which people simultaneously search for a job and accumulate wealth, and fit it to data from the National Longitudinal Survey (1979-cohort). With the recovered behavioral parameters, I perform regime changes consisting in giving blacks (i) the initial wealth distribution, and (ii) the arrival rates and wage offer distribution of whites. These counterfactual experiments show that initial wealth has a modest influence in the black-white difference in early employment careers in comparison with labor market variables.

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Bibliographic Info

Paper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we032303.

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Date of creation: Apr 2003
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Handle: RePEc:cte:werepe:we032303

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  1. Bowlus, A.J. & Eckstein, Z., 1998. "Discrimination and Skill Differences in an Equilibrium Search Model," Papers 04-98, Tel Aviv.
  2. Maury Gittleman & Edward N. Wolff, 2004. "Racial Differences in Patterns of Wealth Accumulation," Journal of Human Resources, University of Wisconsin Press, vol. 39(1).
  3. Silvio Rendón, 2002. "Job Search And Asset Accumulation Under Borrowing Constraints," Economics Working Papers we025219, Universidad Carlos III, Departamento de Economía.
  4. Joseph G. Altonji & Ulrich Doraszelski, 2005. "The Role of Permanent Income and Demographics in Black/White Differences in Wealth," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
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  6. Fairlie, Robert, 2014. "The Absence of the African-American Owned Business: An Analysis of the Dynamics of Self-Employment," Santa Cruz Department of Economics, Working Paper Series qt49c4n0fg, Department of Economics, UC Santa Cruz.
  7. Joseph G. Altonji & Ulrich Doraszelski & Lewis Segal, 2000. "Black/white differences in wealth," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 38-50.
  8. Robert W. Fairlie & Bruce D. Meyer, 1996. "Ethnic and Racial Self-Employment Differences and Possible Explanations," Journal of Human Resources, University of Wisconsin Press, vol. 31(4), pages 757-793.
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  12. Nancy Jianakoplos & Paul Menchik & Owen Irvine, 1989. "Using Panel Data to Assess the Bias in Cross-sectional Inferences of Life-Cycle Changes in the Level and Composition of Household Wealth," NBER Chapters, in: The Measurement of Saving, Investment, and Wealth, pages 553-644 National Bureau of Economic Research, Inc.
  13. Zvi Eckstein & Kenneth I. Wolpin, 1999. "Estimating The Effect Of Racial Discrimination On First Job Wage Offers," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 384-392, August.
  14. Zvi Eckstein & Kenneth I. Wolpin, 1989. "The Specification and Estimation of Dynamic Stochastic Discrete Choice Models: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 24(4), pages 562-598.
  15. Francine D. Blau & John W. Graham, 1990. "Black-White Differences in Wealth and Asset Composition," NBER Working Papers 2898, National Bureau of Economic Research, Inc.
  16. Menchik, Paul L & Jianakoplos, Nancy Ammon, 1997. "Black-White Wealth Inequality: Is Inheritance the Reason?," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 428-42, April.
  17. Orazem, Peter F, 1987. "Black-White Differences in Schooling Investment and Human Capital Production in Segregated Schools," American Economic Review, American Economic Association, vol. 77(4), pages 714-23, September.
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Cited by:
  1. Sílvio Rendon & Alfredo Cuecuecha, 2010. "International job search: Mexicans in and out of the US," Review of Economics of the Household, Springer, vol. 8(1), pages 53-82, March.
  2. Ivan Grguric, 2005. "Moving up the income ladder? What are the obstacles: a case study of indigenous people in Latin America," Financial Theory and Practice, Institute of Public Finance, vol. 29(4), pages 361-381.
  3. Maury Gittleman, 2011. "Medicaid and Wealth: An Examination Using the NLSY79," Working Papers 448, U.S. Bureau of Labor Statistics.

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