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Wages, Sorting on Skill, and the Racial Composition of Jobs

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  • Hirsch, Barry

    ()
    (Georgia State University)

  • Macpherson, David A.

    ()
    (Trinity University)

Abstract

Wages for black and white workers are substantially lower in occupations with a high density of black employees, following standard controls. Such correlations can exist absent discrimination or as a result of discrimination. In wage level equations, the magnitude of the correlation falls sharply after controlling for occupational skills. Longitudinal estimates accounting for worker heterogeneity indicate little if any wage change associated with changes in racial composition. Results support a “quality sorting” explanation, with racial density serving as an index of unmeasured skills. Although past discrimination helps determine the present pattern of job sorting, current discrimination cannot explain the relationship between wages and racial density. Current discrimination reflected in racial wage gaps occurs within occupations or across occupations in a manner uncorrelated with racial composition.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 741.

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Length: 23 pages
Date of creation: Mar 2003
Date of revision:
Publication status: published in: Journal of Labor Economics, 2004, 22 (1), 189-210
Handle: RePEc:iza:izadps:dp741

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Keywords: discrimination; racial composition; skill sorting;

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References

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Cited by:
  1. Aeberhardt, Romain & Pouget, Julien, 2007. "National Origin Wage Differentials in France: Evidence from Matched Employer-Employee Data," IZA Discussion Papers 2779, Institute for the Study of Labor (IZA).
  2. Frijters, Paul & Shields, Michael A. & Theodoropoulos, Nikolaos & Wheatley Price, Stephen, 2003. "Testing for Employee Discrimination Using Matched Employer-Employee Data: Theory and Evidence," IZA Discussion Papers 807, Institute for the Study of Labor (IZA).
  3. Hipólito Simón & Esteban Sanromá & Raúl Ramos, 2008. "Labour segregation and immigrant and native-born wage distributions in Spain: an analysis using matched employer–employee data," Spanish Economic Review, Springer, vol. 10(2), pages 135-168, June.
  4. Judith K. Hellerstein & David Neumark, 2008. "Workplace Segregation in the United States: Race, Ethnicity, and Skill," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 459-477, August.
  5. Olga Alonso-Villar & Coral del Río & Carlos Gradín, 2010. "The extent of occupational segregation in the US: Differences by race, ethnicity, and gender," Working Papers 180, ECINEQ, Society for the Study of Economic Inequality.
  6. Tito Boeri & Marta De Philippis & Eleonora Patacchini & Michele Pelizzari, 2010. "Moving to Segregation: Evidence from 8 Italian cities," EIEF Working Papers Series 1109, Einaudi Institute for Economics and Finance (EIEF), revised Apr 2011.

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