IDEAS home Printed from https://ideas.repec.org/a/fip/fedlrv/00118.html
   My bibliography  Save this article

Racial Gaps, Occupational Matching, and Skill Uncertainty

Author

Listed:
  • Limor Golan
  • Carl Sanders

Abstract

White workers in the United States earn almost 30 percent more per hour on average than Black workers, and this wage gap is associated with large racial differences in occupational assignments. In this article, we theoretically and empirically examine the Black-White disparity in occupations. First, we present a model based on Antonovics and Golan (2012) that relates occupational assignments to the incentives workers face while learning about their own unknown ability. Second, we document differences between Black and White workers in both the complexity of skills required in their initial occupations and the growth rates of this complexity over time. To do this, we match panel data from the National Longitudinal Survey of Youth 1979 with the Dictionary of Occupational Titles measures of occupational characteristics and find that, compared with White workers, Black workers start in occupations requiring less-complex skills, see slower growth in job complexity over time, and are relatively more likely to transition to jobs with lower complexity. Finally, we consider the relationship between our model and our empirical findings; for example, discrimination in hiring early in the career can have long-term consequences on the ability of Black workers to learn their best occupational match and explains part of their lower wage growth. We conclude with suggestions for policy and future research directions.

Suggested Citation

  • Limor Golan & Carl Sanders, 2019. "Racial Gaps, Occupational Matching, and Skill Uncertainty," Review, Federal Reserve Bank of St. Louis, vol. 101(2), pages 135-153.
  • Handle: RePEc:fip:fedlrv:00118
    DOI: 10.20955/r.101.135-53
    as

    Download full text from publisher

    File URL: https://research.stlouisfed.org/publications/review/2019/04/15/full-issue.pdf
    File Function: Issue Full text
    Download Restriction: no

    File URL: https://research.stlouisfed.org/publications/review/2019/04/15/racial-gaps-occupational-matching-and-skill-uncertainty
    File Function: Article Full text
    Download Restriction: no

    File URL: https://libkey.io/10.20955/r.101.135-53?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Henry S. Farber & Robert Gibbons, 1996. "Learning and Wage Dynamics," The Quarterly Journal of Economics, Oxford University Press, vol. 111(4), pages 1007-1047.
    2. Oettinger, Gerald S, 1996. "Statistical Discrimination and the Early Career Evolution of the Black-White Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 52-78, January.
    3. Carl Sanders & Christopher Taber, 2012. "Life-Cycle Wage Growth and Heterogeneous Human Capital," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 399-425, July.
    4. Kate Antonovics & Limor Golan, 2012. "Experimentation and Job Choice," Journal of Labor Economics, University of Chicago Press, vol. 30(2), pages 333-366.
    5. Theodore Papageorgiou, 2014. "Learning Your Comparative Advantages," Review of Economic Studies, Oxford University Press, vol. 81(3), pages 1263-1295.
    Full references (including those not matched with items on IDEAS)

    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. Kevin L. Kliesen & Brian Levine & Christopher J. Waller, 2019. "Gauging Market Responses to Monetary Policy Communication," Review, Federal Reserve Bank of St. Louis, vol. 101(2), pages 69-91.
    2. YiLi Chien & Junsang Lee, 2019. "The Real Term Premium in a Stationary Economy with Segmented Asset Markets," Review, Federal Reserve Bank of St. Louis, vol. 101(2), pages 115-134.
    3. Fernando Leibovici, 2019. "International Trade Openness and Monetary Policy: Evidence from Cross-Country Data," Review, Federal Reserve Bank of St. Louis, vol. 101(2), pages 93-113.
    4. Pedros Silos & Eric Smith, 2015. "Human Capital Portfolios," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 635-652, July.
    5. Argaw, Bethlehem A. & Maier, Michael F. & Skriabikova, Olga J., 2017. "Risk attitudes, job mobility and subsequent wage growth during the early career," ZEW Discussion Papers 17-023, ZEW - Leibniz Centre for European Economic Research.
    6. Fatih Guvenen & Burhan Kuruscu & Satoshi Tanaka & David Wiczer, 2020. "Multidimensional Skill Mismatch," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(1), pages 210-244, January.
    7. Canidio, Andrea & Legros, Patrick, 2016. "The Value of Entrepreneurial Failures: Task Allocation and Career Concerns," CEPR Discussion Papers 11295, C.E.P.R. Discussion Papers.
    8. Maier, Michael & Argaw, Bethlehem A. & Maier, Michael F. & Skriabikova, Olga J., 2016. "Risk attitudes, job mobility and subsequent wage growth during the early career," VfS Annual Conference 2016 (Augsburg): Demographic Change 145677, Verein für Socialpolitik / German Economic Association.
    9. Hani Mansour, 2012. "Does Employer Learning Vary by Occupation?," Journal of Labor Economics, University of Chicago Press, vol. 30(2), pages 415-444.
    10. Aspen Gorry, 2016. "Experience and worker flows," Quantitative Economics, Econometric Society, vol. 7(1), pages 225-255, March.
    11. Tani, Massimiliano, 2017. "Local signals and the returns to foreign education," Economics of Education Review, Elsevier, vol. 61(C), pages 174-190.
    12. Aspen Gorry & Devon Gorry & Nicholas Trachter, 2019. "Learning And Life Cycle Patterns Of Occupational Transitions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(2), pages 905-937, May.
    13. Murnane, Richard J. & Willett, John B. & Braatz, M. Jay & Duhaldeborde, Yves, 2001. "Do different dimensions of male high school students' skills predict labor market success a decade later? Evidence from the NLSY," Economics of Education Review, Elsevier, vol. 20(4), pages 311-320, August.
    14. Ralph Stinebrickner & Todd Stinebrickner & Paul Sullivan, 2019. "Beauty, Job Tasks, and Wages: A New Conclusion about Employer Taste-Based Discrimination," The Review of Economics and Statistics, MIT Press, vol. 101(4), pages 602-615, October.
    15. Isaac Baley & Laura Veldkamp, 2021. "Bayesian learning," Economics Working Papers 1797, Department of Economics and Business, Universitat Pompeu Fabra.
    16. Shing-Yi Wang, 2015. "Statistical Discrimination, Productivity, and the Height of Immigrants," ILR Review, Cornell University, ILR School, vol. 68(3), pages 529-557, May.
    17. Blattman, Christopher & Dercon, Stefan, 2016. "Occupational choice in early industrializing societies: Experimental evidence on the income and health effects of industrial and entrepreneurial work," CEPR Discussion Papers 11556, C.E.P.R. Discussion Papers.
    18. Pinkston, Joshua C., 2003. "Screening discrimination and the determinants of wages," Labour Economics, Elsevier, vol. 10(6), pages 643-658, December.
    19. Yariv Fadlon, 2015. "Statistical Discrimination and the Implication of Employer-Employee Racial Matches," Journal of Labor Research, Springer, vol. 36(2), pages 232-248, June.
    20. Carl Sanders, 2012. "Skill Uncertainty, Skill Accumulation, and Occupational Choice," 2012 Meeting Papers 633, Society for Economic Dynamics.

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    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:fip:fedlrv:00118. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/frbslus.html .

    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: (email available below). General contact details of provider: https://edirc.repec.org/data/frbslus.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.