IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp12101.html
   My bibliography  Save this paper

Labor Market Discrimination and the Macroeconomy

Author

Listed:
  • Asali, Muhammad

    (College of Management Academic Studies)

  • Gurashvili, Rusudan

    (National Bank of Georgia)

Abstract

Using Integrated Household Survey data from Georgia, we measure the observable and discriminatory ethnic wage gap, among male and female workers, and the gender wage gap, among Georgians and non-Georgians. The gender wage discrimination is larger than the ethnic wage discrimination. In the second estimation stage, these wage discrimination estimates are used in a general-to-specific vector autoregression framework to test for the Granger causality between discrimination and growth. A general, negative, bidirectional Granger causality is found between these two variables: in the long-run, discrimination reduces economic growth, and economic growth lowers discrimination. Also, we find that higher unemployment rates are associated with increased ethnic wage discrimination–in line with the predictions of Becker's theory of discrimination.

Suggested Citation

  • Asali, Muhammad & Gurashvili, Rusudan, 2019. "Labor Market Discrimination and the Macroeconomy," IZA Discussion Papers 12101, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12101
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp12101.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stijn Baert & Bart Cockx & Niels Gheyle & Cora Vandamme, 2015. "Is There Less Discrimination in Occupations Where Recruitment Is Difficult?," ILR Review, Cornell University, ILR School, vol. 68(3), pages 467-500, May.
    2. Asali, Muhammad & Pignatti, Norberto & Skhirtladze, Sophiko, 2018. "Employment discrimination in a former Soviet Union Republic: Evidence from a field experiment," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1294-1309.
    3. Muhammad Asali & Norberto Pignatti & Sophiko Skhirtladze, 2017. "Employment Discrimination in Georgia: Evidence from a Field Experiment," Working Papers 004-17 JEL Codes: J15, J7, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    4. Oriana Bandiera & Ashwini Natraj, 2013. "Does Gender Inequality Hinder Development and Economic Growth? Evidence and Policy Implications," The World Bank Research Observer, World Bank, vol. 28(1), pages 2-21, February.
    5. Jeff Biddle & Daniel Hamermesh, 2013. "Wage discrimination over the business cycle," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-19, December.
    6. Adams, Scott J., 2004. "Age discrimination legislation and the employment of older workers," Labour Economics, Elsevier, vol. 11(2), pages 219-241, April.
    7. Kaivan Munshi & Mark Rosenzweig, 2016. "Networks and Misallocation: Insurance, Migration, and the Rural-Urban Wage Gap," American Economic Review, American Economic Association, vol. 106(1), pages 46-98, January.
    8. Muhammad Asali, 2019. "vgets: A program to estimate general-to-specific VARs, Granger causality, steady-state effects, and cumulative impulse responses," Working Papers 007-19, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    9. Garcia-Minguez, Patricio & Sanchez-Losada, Fernando, 2003. "Statistical discrimination and growth: should we subsidize discriminated against workers?," Economics Letters, Elsevier, vol. 79(2), pages 255-261, May.
    10. Orley Ashenfelter, 1970. "Changes in Labor Market Discrimination Over Time," Journal of Human Resources, University of Wisconsin Press, vol. 5(4), pages 403-430.
    11. Rich, Judy, 2014. "What Do Field Experiments of Discrimination in Markets Tell Us? A Meta Analysis of Studies Conducted since 2000," IZA Discussion Papers 8584, Institute of Labor Economics (IZA).
    12. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
    13. Muhammad Asali & Aamer S. Abu‐Qarn & Michael Beenstock, 2017. "The cycle of violence in the Second Intifada: Causality in nonlinear vector autoregressive models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(6), pages 1197-1205, September.
    14. Sedgley, Norman & Elmslie, Bruce, 2006. "Discrimination and growth: The distribution across skills matters," Economics Letters, Elsevier, vol. 90(2), pages 194-199, February.
    15. Seguino, Stephanie, 2000. "Gender Inequality and Economic Growth: A Cross-Country Analysis," World Development, Elsevier, vol. 28(7), pages 1211-1230, July.
    16. Gaëlle Ferrant & Alexandre Kolev, 2016. "Does gender discrimination in social institutions matter for long-term growth?: Cross-country evidence," OECD Development Centre Working Papers 330, OECD Publishing.
    17. Muhammad Asali, 2010. "Jewish-Arab Wage Gap: What Are The Causes?," Defence and Peace Economics, Taylor & Francis Journals, vol. 21(4), pages 367-380.
    18. Malani, Anup & Reif, Julian, 2015. "Interpreting pre-trends as anticipation: Impact on estimated treatment effects from tort reform," Journal of Public Economics, Elsevier, vol. 124(C), pages 1-17.
    19. Stephan Klasen & Francesca Lamanna, 2009. "The Impact of Gender Inequality in Education and Employment on Economic Growth: New Evidence for a Panel of Countries," Feminist Economics, Taylor & Francis Journals, vol. 15(3), pages 91-132.
    20. Karl David Boulware & Kenneth N. Kuttner, 2019. "Labor Market Conditions and Discrimination: Is There a Link?," AEA Papers and Proceedings, American Economic Association, vol. 109, pages 166-170, May.
    21. Chang‐Tai Hsieh & Erik Hurst & Charles I. Jones & Peter J. Klenow, 2019. "The Allocation of Talent and U.S. Economic Growth," Econometrica, Econometric Society, vol. 87(5), pages 1439-1474, September.
    22. Schober, Thomas & Winter-Ebmer, Rudolf, 2011. "Gender Wage Inequality and Economic Growth: Is There Really a Puzzle?--A Comment," World Development, Elsevier, vol. 39(8), pages 1476-1484, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Larisa Stanila & Maria Denisa Vasilescu & Eva Militaru, 2020. "Investigating Labor Market Discrimination in Romania," Sustainability, MDPI, vol. 12(12), pages 1-19, June.
    2. Sarkodie, Samuel Asumadu & Ahmed, Maruf Yakubu & Leirvik, Thomas, 2022. "Trade volume affects bitcoin energy consumption and carbon footprint," Finance Research Letters, Elsevier, vol. 48(C).
    3. Muhammad Asali, 2021. "Gender and ethnic wage differentials inhibit growth: A shred of evidence," Working Papers 002-21, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    4. Muhammad Asali, 2021. "The New Performance Index: An application to COVID-19 era," Working Papers 003-21, International School of Economics at TSU, Tbilisi, Republic of Georgia.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Muhammad Asali, 2021. "Gender and ethnic wage differentials inhibit growth: A shred of evidence," Working Papers 002-21, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    2. Asali, Muhammad & Pignatti, Norberto & Skhirtladze, Sophiko, 2018. "Employment discrimination in a former Soviet Union Republic: Evidence from a field experiment," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 1294-1309.
    3. Gordon B. Dahl & Matthew Knepper, 2023. "Age Discrimination across the Business Cycle," American Economic Journal: Economic Policy, American Economic Association, vol. 15(4), pages 75-112, November.
    4. Romina Kazandjian & Ms. Lisa L Kolovich & Ms. Kalpana Kochhar & Ms. Monique Newiak, 2016. "Gender Equality and Economic Diversification," IMF Working Papers 2016/140, International Monetary Fund.
    5. Haroon Ur Rashid Khan & Anwar Khan & Khalid Zaman & Agha Amad Nabi & Sanil S. Hishan & Talat Islam, 2017. "Gender discrimination in education, health, and labour market: a voice for equality," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(5), pages 2245-2266, September.
    6. Romina Kazandjian & Lisa Kolovich & Kalpana Kochhar & Monique Newiak, 2019. "Gender Equality and Economic Diversification," Social Sciences, MDPI, vol. 8(4), pages 1-24, April.
    7. Abdulla, Kanat, 2019. "Productivity gains from reallocation of talent in Brazil and India," Journal of Macroeconomics, Elsevier, vol. 62(C).
    8. L'Horty, Yannick & Mahmoudi, Naomie & Petit, Pascale & Wolff, François-Charles, 2022. "Is disability more discriminatory in hiring than ethnicity, address or gender? Evidence from a multi-criteria correspondence experiment," Social Science & Medicine, Elsevier, vol. 303(C).
    9. Vernby, Kåre & Dancygier, Rafaela, 2018. "Employer discrimination and the immutability of ethnic hierarchies," Working Paper Series 2018:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    10. David Neumark & Patrick Button, 2014. "Did Age Discrimination Protections Help Older Workers Weather the Great Recession?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 33(3), pages 566-601, June.
    11. Magali Jaoul-Grammare, 2017. "Policy Reform and Gender Inequality in French Higher Education: A Two-Generation Comparative Study," Working Papers of BETA 2017-02, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    12. Joanna Wolszczak-Derlacz, 2013. "The Impact Of Gender Wage Gap On Sectoral Economic Growth – Cross-Country Approach," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 8(3), pages 103-122, September.
    13. Nguyen, Canh Phuc, 2021. "Gender equality and economic complexity," Economic Systems, Elsevier, vol. 45(4).
    14. repec:gdk:wpaper:6 is not listed on IDEAS
    15. Tewodros Makonnen Gebrewolde & James Rockey, 2017. "The Global Gender Gap in Labor Income," Discussion Papers in Economics 17/14, Division of Economics, School of Business, University of Leicester.
    16. David Neumark, 2018. "Experimental Research on Labor Market Discrimination," Journal of Economic Literature, American Economic Association, vol. 56(3), pages 799-866, September.
    17. Magali Jaoul-Grammare, 2013. "L’évolution des inégalités dans l’enseignement supérieur universitaire français au XXème siècle," Post-Print hal-01753405, HAL.
    18. Joanna Tyrowicz & Lucas van der Velde, 2017. "When the opportunity knocks: large structural shocks and gender wage gaps," GRAPE Working Papers 2, GRAPE Group for Research in Applied Economics.
    19. Miguel Angel, 2023. "Differences in the labor market by gender and aggregate income," Sobre México. Revista de Economía, Sobre México. Temas en economía, vol. 1(7), pages 84-114.
    20. Potrafke, Niklas & Ursprung, Heinrich W., 2012. "Globalization and gender equality in the course of development," European Journal of Political Economy, Elsevier, vol. 28(4), pages 399-413.
    21. Lippens, Louis & Vermeiren, Siel & Baert, Stijn, 2023. "The state of hiring discrimination: A meta-analysis of (almost) all recent correspondence experiments," European Economic Review, Elsevier, vol. 151(C).

    More about this item

    Keywords

    labor market discrimination; transition economies; growth; granger causality;
    All these keywords.

    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp12101. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.