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Racial Discrimination in Labor Markets with Posted Wage Offers

Author

Listed:
  • Kevin Lang

    (Institute for Economic Development, Boston University)

  • Michael Manove

    (Institute for Economic Development, Boston University)

  • William T. Dickens

    (The Brookings Institution)

Abstract

We analyze race discrimination in labor markets in which wage offers are posted. If employers with job vacancies receive multiple applicants, they choose the most qualified but may choose arbitrarily among equally qualified applicants. In the model, firms post wages, workers choose where to apply, and firms decide which workers to hire. Labor-market frictions greatly amplify racial disparities, so mild discriminatory tastes or small productivity differences can produce large wage differentials between the races. Compared with the nondiscriminatory equilibrium, the discriminatory equilibrium features lower net output, lower wages for both white and black workers and greater profits for firms.

Suggested Citation

  • Kevin Lang & Michael Manove & William T. Dickens, 2005. "Racial Discrimination in Labor Markets with Posted Wage Offers," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-145, Boston University - Department of Economics.
    • Handle: RePEc:bos:iedwpr:dp-145
    as

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    File URL: http://www.bu.edu/econ/ied/dp/papers/dp145-Lang-Manove.pdf
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    References listed on IDEAS

    as
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    3. Kevin Lang & Michael Manove & William T. Dickens, 2005. "Racial Discrimination in Labor Markets with Posted Wage Offers," American Economic Review, American Economic Association, vol. 95(4), pages 1327-1340, September.
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    JEL classification:

    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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