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Statistical Statistical Discrimination in a Search Equilibrium Model: Racial Wage and Employment Disparities in the US

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Abstract

In the US, black workers spend more time in unemployment, lose their jobs more rapidly, and earn lower wages than white workers. This paper quantifies the contributions of statistical discrimination, as portrayed by negative stereotyping and screening discrimination, to such employment and wage dis- parities. We develop an equilibrium search model of statistical discrimination with learning based on Moscarini (2005) and estimate it by indirect inference. We show that statistical discrimination alone cannot simultaneously explain the observed differences in residual wages and monthly job loss probabilities between black and white workers. However, a model with negative stereotyping, larger unemployment valuation and faster learning about the quality of matches for black workers can account for these facts. One implication of our findings is that black workers have larger returns to tenure.

Suggested Citation

  • Bruno Decreuse & Linas Tarasonis, 2016. "Statistical Statistical Discrimination in a Search Equilibrium Model: Racial Wage and Employment Disparities in the US," AMSE Working Papers 1621, Aix-Marseille School of Economics, Marseille, France.
  • Handle: RePEc:aim:wpaimx:1621
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    References listed on IDEAS

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    1. Jesper Bagger & Fran?ois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2014. "Tenure, Experience, Human Capital, and Wages: A Tractable Equilibrium Search Model of Wage Dynamics," American Economic Review, American Economic Association, vol. 104(6), pages 1551-1596, June.
    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. repec:eee:labeco:v:50:y:2018:i:c:p:45-66 is not listed on IDEAS
    5. Kevin Lang, 1986. "A Language Theory of Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 363-382.
    6. Theodore Papageorgiou, 2014. "Learning Your Comparative Advantages," Review of Economic Studies, Oxford University Press, vol. 81(3), pages 1263-1295.
    7. Costas Cavounidis & Kevin Lang, 2015. "Discrimination and Worker Evaluation," NBER Working Papers 21612, National Bureau of Economic Research, Inc.
    8. George-Levi Gayle & Limor Golan, 2012. "Estimating a Dynamic Adverse-Selection Model: Labour-Force Experience and the Changing Gender Earnings Gap 1968--1997," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 227-267.
    9. Borowczyk-Martins, Daniel & Bradley, Jake & Tarasonis, Linas, 2018. "Racial discrimination in the U.S. labor market: Employment and wage differentials by skill," Labour Economics, Elsevier, vol. 50(C), pages 45-66.
    10. 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.
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    Keywords

    Learning; Screening discrimination; Job search; Indirect inference;

    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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