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The role of location in evaluating racial wage disparity

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  • Dan A. Black
  • Natalia A. Kolesnikova
  • Seth G. Sanders
  • Lowell J. Taylor

Abstract

A standard object of empirical analysis in labor economics is a modified Mincer wage function in which an individual's log wage is specified to be a function of education, experience, and an indicator variable identifying race. Researchers hope that estimates from this exercise can be informative about the impact of minority status on labor market success. Here we set out a theoretical justification for this regression in a context in which individuals live and work in different locations. Our model leads to the traditional approach, but with the important caveat that the regression should include location-specific fixed effects. Given this insight, we reevaluate evidence about the black-white wage disparity in the United States.

Suggested Citation

  • Dan A. Black & Natalia A. Kolesnikova & Seth G. Sanders & Lowell J. Taylor, 2009. "The role of location in evaluating racial wage disparity," Working Papers 2009-043, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:2009-043
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    References listed on IDEAS

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    4. Neal, Derek, 2006. "Why Has Black-White Skill Convergence Stopped?," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 9, pages 511-576, Elsevier.
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    6. Cunha, Flavio & Heckman, James J. & Lochner, Lance, 2006. "Interpreting the Evidence on Life Cycle Skill Formation," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 12, pages 697-812, Elsevier.
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    8. Amitabh Chandra, 2000. "Labor-Market Dropouts and the Racial Wage Gap: 1940-1990," American Economic Review, American Economic Association, vol. 90(2), pages 333-338, May.
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    Citations

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    Cited by:

    1. Peter McHenry & Melissa McInerney, 2012. "Are Wage Premiums for Black Women Illusory? A Critical Examination," Working Papers 120, Department of Economics, College of William and Mary.
    2. Maye Ehab, 2018. "The Commuting Gender Gap and Females’ Participation and Earnings in the Egyptian Labor Market," Working Papers 1211, Economic Research Forum, revised 21 Jun 2018.
    3. Andrés F. Barrientos & Alexander Bolton & Tom Balmat & Jerome P. Reiter & John M. de Figueiredo & Ashwin Machanavajjhala & Yan Chen & Charles Kneifel & Mark DeLong, 2017. "A Framework for Sharing Confidential Research Data, Applied to Investigating Differential Pay by Race in the U. S. Government," NBER Working Papers 23534, National Bureau of Economic Research, Inc.
    4. Jean-Baptiste Vilain, 2018. "Three essays in applied economics," Sciences Po publications info:hdl:2441/64devegb4f8, Sciences Po.
    5. Mora, Jhon James & Arcila, Andrés Mauricio, 2014. "Brechas salariales por etnia y ubicación geográfica en Santiago de Cali || Wage Gap by Geographic Location and Ethnicity in Cali (Colombia)," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 18(1), pages 34-53, December.
    6. Roland G. Fryer, Jr. & Devah Pager & Jörg L. Spenkuch, 2013. "Racial Disparities in Job Finding and Offered Wages," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 633-689.
    7. Rathelot, Roland, 2014. "Ethnic differentials on the labor market in the presence of asymmetric spatial sorting: Set identification and estimation," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 154-167.
    8. Jean-Baptiste Vilain, 2018. "Three essays in applied economics [Trois essais en économie appliquée]," SciencePo Working papers Main tel-03419493, HAL.
    9. Peter McHenry & Melissa McInerney, 2015. "Estimating Hispanic-White Wage Gaps Among Women: The Importance of Controlling for Cost of Living," Journal of Labor Research, Springer, vol. 36(3), pages 249-273, September.
    10. Chunbei Wang & Le Wang, 2011. "Language Skills and the Earnings Distribution Among Child Immigrants," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 50(2), pages 297-322, April.
    11. Kevin Lang & Jee-Yeon K. Lehmann, 2012. "Racial Discrimination in the Labor Market: Theory and Empirics," Journal of Economic Literature, American Economic Association, vol. 50(4), pages 959-1006, December.
    12. Dan A. Black & Natalia A. Kolesnikova & Lowell J. Taylor, 2010. "The economic progress of African Americans in urban areas: a tale of 14 cities," Review, Federal Reserve Bank of St. Louis, vol. 92(Sep), pages 353-379.
    13. Martin Abel, 2017. "Labor market discrimination and sorting: Evidence from South Africa," SALDRU Working Papers 205, Southern Africa Labour and Development Research Unit, University of Cape Town.
    14. Peter McHenry & Melissa McInerney, 2014. "The Importance of Cost of Living and Education in Estimates of the Conditional Wage Gap Between Black and White Women," Journal of Human Resources, University of Wisconsin Press, vol. 49(3), pages 695-722.
    15. Longhi, Simonetta, 2017. "Spatial-Ethnic Inequalities: The Role of Location in the Estimation of Ethnic Wage Differentials," IZA Discussion Papers 11073, Institute of Labor Economics (IZA).
    16. Barry T. Hirsch & John V. Winters, 2014. "An Anatomy Of Racial and Ethnic Trends in Male Earnings in the U.S," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 930-947, December.
    17. Wursten, Jesse & Reich, Michael, 2023. "Racial inequality in frictional labor markets: Evidence from minimum wages," Labour Economics, Elsevier, vol. 82(C).
    18. Laura A Harvey & James Rockey, 2020. "The declining fortunes of (most) American workers," University of East Anglia School of Economics Working Paper Series 2020-04, School of Economics, University of East Anglia, Norwich, UK..
    19. Winters, John V. & Hirsch, Barry, 2012. "An Anatomy of Racial and Ethnic Trends in Male Earnings," IZA Discussion Papers 6766, Institute of Labor Economics (IZA).
    20. Dan A. Black & Natalia A. Kolesnikova & Lowell J. Taylor, 2010. "African-American economic progress in urban areas: a tale of 14 American cities," Working Papers 2010-015, Federal Reserve Bank of St. Louis.
    21. repec:hal:spmain:info:hdl:2441/64devegb4f8l7a342ageb19ehc is not listed on IDEAS

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    Keywords

    Income distribution; Wages; Discrimination in employment;
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