Labor Market Discrimination and Capital Investment: The Effects of Fan Discrimination on Stadium Investment
AbstractWe investigate the possibility that labor market discrimination affects economic outcomes in the complementary capital market. Previous research contains ample theoretical justification, and empirical evidence, that discrimination affects wages and employment in labor markets. However, the effects of discrimination against minority labor on transactions in markets for other inputs used in production are not known. We develop a model of the optimal capital stock put in place in the presence of customer discrimination and test this model using data on sports facility construction over the period 1950-2004. The empirical evidence suggests that teams in cities with more racial segregation spend less on sports facilities, confirming the predictions of the model about the effect of customer discrimination on capital investment.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4551.
Length: 25 pages
Date of creation: Nov 2009
Date of revision:
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Find related papers by JEL classification:
- J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, and Immigrants; Non-labor Discrimination
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-27 (All new papers)
- NEP-LAB-2009-11-27 (Labour Economics)
- NEP-SPO-2009-11-27 (Sports & Economics)
- NEP-URE-2009-11-27 (Urban & Real Estate Economics)
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