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Car ownership and the Labor Market of Ethnic Minorities

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  • Pieter A. Gautier

    ()
    (VU University Amsterdam, and CEPR)

  • Yves Zenou

    ()
    (Stockholm University and Research Institute of Industrial Economics, Sweden)

Abstract

We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labor-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 labor market outcomes.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 08-106/3.

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Date of creation: 03 Nov 2008
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Handle: RePEc:dgr:uvatin:20080106

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Keywords: Transportation; mismatch; job search; spatial labor markets; multiple job centers; ethnic minorities;

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Cited by:
  1. Deokrye Baek, . "The Effect of Public Transportation Accessibility on Food Insecurity," Departmental Working Papers 2013-02, Department of Economics, Louisiana State University.
  2. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers 0120, Spatial Economics Research Centre, LSE.
  3. 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.
  4. Yip, Chi Man, 2011. "Size and The City: Productivity, Match Quality and Wage Inequality," MPRA Paper 31255, University Library of Munich, Germany.
  5. Elena Stancanelli & Peter Rupert & Etienne Wasmer, 2009. "Commuting, Wages and Bargaining Power," Sciences Po publications 2009-02, Sciences Po.
  6. Gobillon, Laurent & Rupert, Peter & Wasmer, Etienne, 2013. "Ethnic Unemployment Rates and Frictional Markets," CEPR Discussion Papers 9507, C.E.P.R. Discussion Papers.
  7. Vincent Boitier, 2013. "Endogenous city size in urban search models: the case of high reallocation costs," ERSA conference papers ersa13p590, European Regional Science Association.
  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. Mikhed, Vyacheslav & Scholnick, Barry, 2014. "Financial benefits, travel costs, and bankruptcy," Working Papers 14-18, Federal Reserve Bank of Philadelphia.
  10. Zenou, Yves, 2009. "Search in cities," European Economic Review, Elsevier, vol. 53(6), pages 607-624, August.
  11. 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.
  12. repec:spo:wpecon:info:hdl:2441/10031 is not listed on IDEAS

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