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Racial discrimination in the U.S. labor market: Employment and wage differentials by skill

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  • Borowczyk-Martins, Daniel
  • Bradley, Jake
  • Tarasonis, Linas

Abstract

In the U.S. the average black worker has a lower employment rate and earns a lower wage compared to his white counterpart. Lang and Lehmann (2012) argue that black–white wage and employment gaps are smaller for high-skill workers. We show that a model combining employer taste-based discrimination, search frictions and skill complementarities can replicate these regularities, and estimate it using data from the U.S. manufacturing sector. We find that discrimination is quantitatively important to understand differences in wages and job finding rates across workers with low education levels, whereas skill differences are the main driver of those differences among workers with high education levels.

Suggested Citation

  • Borowczyk-Martins, Daniel & Bradley, Jake & Tarasonis, Linas, 2017. "Racial discrimination in the U.S. labor market: Employment and wage differentials by skill," Labour Economics, Elsevier, vol. 49(C), pages 106-127.
  • Handle: RePEc:eee:labeco:v:49:y:2017:i:c:p:106-127
    DOI: 10.1016/j.labeco.2017.09.007
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    Citations

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    Cited by:

    1. Bruno Decreuse & Linas Tarasonis, 2016. "Statistical Discrimination in a Search Equilibrium Model: Racial Wage and Employment Disparities in the US," Working Papers halshs-01327961, HAL.
    2. Bobba, Matteo & Flabbi, Luca & Levy Algazi, Santiago, 2017. "Labor Market Search, Informality and Schooling Investments," IZA Discussion Papers 11170, Institute for the Study of Labor (IZA).
    3. Jacques Melitz & Farid Toubal, 2018. "Somatic Distance, Cultural Affinities, Trust and Trade," CESifo Working Paper Series 7051, CESifo Group Munich.
    4. Jacques Melitz & Farid Toubal, 2018. "Somatic Distance, Trust and Trade," Working Papers 2018-11, CEPII research center.

    More about this item

    Keywords

    Employment and wage gaps; Discrimination; Job search; Sorting;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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