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Estimating The Effect Of Racial Discrimination On First Job Wage Offers

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  • Zvi Eckstein
  • Kenneth I. Wolpin

Abstract

In this paper we develop and implement a method for bounding the extent to which labor market discrimination can account for racial wage differentials. The method is based on a two-sided, search-matching model that formally accounts for unobserved heterogeneity and unobserved offered wages. We find that racial differences in offered wages are proportionately twice (three times) as large as racial differences in accepted wages for high-school dropouts (high-school graduates). The results indicate that discrimination could account for the entire racial wage-offer differential for high-school dropouts and for high-school graduates, i.e., the bound on the extent of discrimination is not informative. © 1999 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Suggested Citation

  • Zvi Eckstein & Kenneth I. Wolpin, 1999. "Estimating The Effect Of Racial Discrimination On First Job Wage Offers," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 384-392, August.
  • Handle: RePEc:tpr:restat:v:81:y:1999:i:3:p:384-392
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    Citations

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    Cited by:

    1. Audra J. Bowlus & Zvi Eckstein, 2002. "Discrimination and Skill Differences in an Equilibrium Search Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1309-1345, November.
    2. Luca Flabbi, 2010. "Gender Discrimination Estimation In A Search Model With Matching And Bargaining," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(3), pages 745-783, August.
    3. repec:eee:labeco:v:49:y:2017:i:c:p:106-127 is not listed on IDEAS
    4. Rendon, Silvio, 2007. "Does Wealth Explain BlackWhite Differences in Early Employment Careers?," Journal of Business & Economic Statistics, American Statistical Association, vol. 25, pages 484-500, October.
    5. Roland G. Fryer, Jr. & Devah Pager & Jörg L. Spenkuch, 2013. "Racial Disparities in Job Finding and Offered Wages," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 633-689.
    6. Gianmarco I.P. Ottaviano & Giovanni Peri, 2016. "The economic value of cultural diversity: evidence from US cities," World Scientific Book Chapters,in: The Economics of International Migration, chapter 7, pages 229-264 World Scientific Publishing Co. Pte. Ltd..
    7. 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.
    8. Bünstorf, Guido & Krabel, Stefan, 2014. "Gender and Immigration: Double Negative Effects in the Labor Market Outcomes of University Graduates in Germany?," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100290, Verein für Socialpolitik / German Economic Association.
    9. repec:kap:compec:v:50:y:2017:i:3:d:10.1007_s10614-016-9592-1 is not listed on IDEAS
    10. Flabbi, Luca & Moro, Andrea, 2012. "The effect of job flexibility on female labor market outcomes: Estimates from a search and bargaining model," Journal of Econometrics, Elsevier, vol. 168(1), pages 81-95.
    11. Francesco Renna & Randall King, 2007. "The Impact of Racial Discrimination on the Early Career Outcomes of Young Men," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 35(3), pages 269-278, September.
    12. Ahn, Tom & Arcidiacono, Peter & Murphy, Alvin & Swinton, Omari, 2010. "Explaining cross-racial differences in teenage labor force participation: Results from a two-sided matching model," Journal of Econometrics, Elsevier, vol. 156(1), pages 201-211, May.

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