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Racial Disparity in Unemployment


  • Joseph A Ritter

    (University of Minnesota)

  • Lowell J Taylor

    (Carnegie Mellon University)


In the United States, black workers earn less than their white counterparts and have higher rates of unemployment. Empirical work indicates that most of this wage gap is accounted for by differences in cognitive skills that emerge at an early age. In this paper, we demonstrate that the same is not true for black-white disparity in unemployment. A large unexplained unemployment differential motivates the paper's second contribution-—a potential theoretical explanation. This explanation is built around a model that embeds statistical discrimination into the subjective worker evaluation process that lies at the root of the efficiency-wage theory of equilibrium unemployment. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Joseph A Ritter & Lowell J Taylor, 2011. "Racial Disparity in Unemployment," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 30-42, February.
  • Handle: RePEc:tpr:restat:v:93:y:2011:i:1:p:30-42

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    References listed on IDEAS

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    Cited by:

    1. Romain Aeberhardt & Élise Coudin & Roland Rathelot, 2017. "The heterogeneity of ethnic employment gaps," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(1), pages 307-337, January.
    2. Pablo Lavado & Gustavo Yamada, 2013. "Fear of Labor Rigidities – The Role of Expectations in Employment Growth in Peru," Working Papers 13-16, Centro de Investigación, Universidad del Pacífico.
    3. Joseph A. Ritter, 2013. "Racial and Ethnic Differences in Nonwage Compensation," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(4), pages 829-852, October.
    4. Daniel Borowczyk-Martins & Jake Bradley & Linas Tarasonis, 2014. "Racial Discrimination in the U.S. Labor Market: Employment and Wage Differentials by Skill," AMSE Working Papers 1413, Aix-Marseille School of Economics, Marseille, France, revised Apr 2014.
    5. repec:kap:jfsres:v:52:y:2017:i:3:d:10.1007_s10693-016-0246-1 is not listed on IDEAS
    6. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01277548, HAL.
    7. Donald Freeman, 2012. "On (Not) Closing the Gaps: The Evolution of National and Regional Unemployment Rates by Race and Ethnicity," The Review of Black Political Economy, Springer;National Economic Association, vol. 39(2), pages 267-284, June.
    8. Randall Akee & Maggie R. Jones & Sonya R. Porter, 2017. "Race Matters: Income Shares, Income Inequality, and Income Mobility for All U.S. Races," NBER Working Papers 23733, National Bureau of Economic Research, Inc.
    9. Barry T. Hirsch & John V. Winters, 2014. "An Anatomy Of Racial and Ethnic Trends in Male Earnings in the U.S," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 930-947, December.
    10. Rathelot, Roland, 2014. "Ethnic differentials on the labor market in the presence of asymmetric spatial sorting: Set identification and estimation," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 154-167.
    11. Pablo Lavado & Luciana Velarde & Gustavo Yamada, 2014. "Cognitive and Socioemotional Skills and Wages: The role of latent abilities on the gender wage gap in Peru," Working Papers 2014-16, Peruvian Economic Association.
    12. Rebitzer, James B. & Taylor, Lowell J., 2011. "Extrinsic Rewards and Intrinsic Motives: Standard and Behavioral Approaches to Agency and Labor Markets," Handbook of Labor Economics, Elsevier.
    13. Johnston, David W. & Lordan, Grace, 2016. "Racial prejudice and labour market penalties during economic downturns," European Economic Review, Elsevier, vol. 84(C), pages 57-75.
    14. Johnston, David W. & Lordan, Grace, 2014. "When work disappears: racial prejudice and recession labour market penalties," LSE Research Online Documents on Economics 56110, London School of Economics and Political Science, LSE Library.
    15. Winters, John V. & Hirsch, Barry, 2012. "An Anatomy of Racial and Ethnic Trends in Male Earnings," IZA Discussion Papers 6766, Institute for the Study of Labor (IZA).
    16. Patrick Bayer & Kerwin Kofi Charles, 2016. "Divergent Paths: Structural Change, Economic Rank, and the Evolution of Black-White Earnings Differences, 1940-2014," NBER Working Papers 22797, National Bureau of Economic Research, Inc.
    17. Yamada, Gustavo & Lavado, Pablo & Velarde, Luciana, 2013. "Habilidades No Cognitivas y Brecha de Género Salarial en el Perú," Working Papers 2013-014, Banco Central de Reserva del Perú.
    18. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Documents de travail du Centre d'Economie de la Sorbonne 16002, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
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    21. BI, Sheng & LI, Yuanyuan, 2015. "Holdup and hiring discrimination with search friction," MPRA Paper 65100, University Library of Munich, Germany.
    22. repec:spr:soinre:v:132:y:2017:i:3:d:10.1007_s11205-016-1325-2 is not listed on IDEAS
    23. Tongzhe Li, 2016. "Who Wants Income Inequality?: An Analysis of Public Choice under Income Comparison," Social Sciences, MDPI, Open Access Journal, vol. 5(3), pages 1-17, July.

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