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

Author

Listed:
  • Bruno Decreuse

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Linas Tarasonis

    (Vilnius University [Vilnius], Bank of Lithuania)

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 disparities. 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. JEL Codes: J31, J64, J71.

Suggested Citation

  • Bruno Decreuse & Linas Tarasonis, 2021. "Statistical Discrimination in a Search Equilibrium Model: Racial Wage and Employment Disparities in the US," Post-Print hal-03856298, HAL.
    • Handle: RePEc:hal:journl:hal-03856298
    DOI: 10.15609/annaeconstat2009.143.0105
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    Cited by:

    1. is not listed on IDEAS
    2. Jeremy McCauley, 2020. "The Role of Information in Explaining the Lack of Welfare-Induced Migration," Bristol Economics Discussion Papers 20/729, School of Economics, University of Bristol, UK.
    3. Christopher Rauh & Aranu Valladares-Esteban, 2023. "On the black-white gaps in labor supply and earnings over the lifecycle in the US," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 424-449, December.

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    Keywords

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    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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