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Car Ownership and the Labor Market of Ethnic Minorities

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  • Gautier, Pieter

    ()
    (VU University Amsterdam)

  • Zenou, Yves

    ()
    (Stockholm University)

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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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3814.

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Length: 34 pages
Date of creation: Nov 2008
Date of revision:
Publication status: published in Journal of Urban Economics, 2010, 67 (3), 392-403.
Handle: RePEc:iza:izadps:dp3814

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

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Cited by:
  1. Zenou, Yves, 2009. "Search in cities," European Economic Review, Elsevier, vol. 53(6), pages 607-624, August.
  2. Gobillon, Laurent & Rupert, Peter & Wasmer, Etienne, 2013. "Ethnic Unemployment Rates and Frictional Markets," IZA Discussion Papers 7448, Institute for the Study of Labor (IZA).
  3. Mikhed, Vyacheslav & Scholnick, Barry, 2014. "Financial benefits, travel costs, and bankruptcy," Working Papers 14-18, Federal Reserve Bank of Philadelphia.
  4. 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).
  5. Aslund, Olof & Östh, John & Zenou, Yves, 2006. "How Important is Access to Jobs? Old Question - Improved Answer," CEPR Discussion Papers 5586, C.E.P.R. Discussion Papers.
  6. 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.
  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. Vincent Boitier, 2013. "Endogenous city size in urban search models: the case of high reallocation costs," ERSA conference papers ersa13p590, European Regional Science Association.
  10. Yip, Chi Man, 2011. "Size and The City: Productivity, Match Quality and Wage Inequality," MPRA Paper 31255, University Library of Munich, Germany.
  11. Deokrye Baek, . "The Effect of Public Transportation Accessibility on Food Insecurity," Departmental Working Papers 2013-02, Department of Economics, Louisiana State University.
  12. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers 0120, Spatial Economics Research Centre, LSE.

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