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Labour market discrimination and the macroeconomy

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  • Muhammad Asali
  • Rusudan Gurashvili

Abstract

We measure the discriminatory ethnic and gender wage gaps in Georgia. Gender wage discrimination is larger than the ethnic wage discrimination. We use the estimated gaps in a general‐to‐specific vector autoregression framework to test for Granger causality between discrimination and growth, and estimate the long‐run effects of each variable on the other. Granger causality is found to be bidirectional, but it is only the net long‐run effect of discrimination on growth that is a large and highly significant negative effect. In the long‐run, a 10% increase in ethnic (gender) discrimination reduces economic growth by 3%–4% (8%–10%). Additionally, ethnic and gender wage differentials are found to be counter‐cyclical.

Suggested Citation

  • Muhammad Asali & Rusudan Gurashvili, 2020. "Labour market discrimination and the macroeconomy," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 28(3), pages 515-533, July.
    • Handle: RePEc:wly:ectrin:v:28:y:2020:i:3:p:515-533
    DOI: 10.1111/ecot.12249
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    Cited by:

    1. Muhammad Asali, 2021. "Gender and ethnic wage differentials inhibit growth: A shred of evidence," Working Papers 002-21, International School of Economics at TSU, Tbilisi, Republic of Georgia.
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    4. Sarkodie, Samuel Asumadu & Ahmed, Maruf Yakubu & Leirvik, Thomas, 2022. "Trade volume affects bitcoin energy consumption and carbon footprint," Finance Research Letters, Elsevier, vol. 48(C).

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    More about this item

    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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