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Labor Market Discrimination and the Macroeconomy

Author

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  • Asali, Muhammad

    (ISET, Tbilisi State University)

  • Gurashvili, Rusudan

    (National Bank of Georgia)

Abstract

Using Integrated Household Survey data from Georgia, we measure the observable and discriminatory ethnic wage gap, among male and female workers, and the gender wage gap, among Georgians and non-Georgians. The gender wage discrimination is larger than the ethnic wage discrimination. In the second estimation stage, these wage discrimination estimates are used in a general-to-specific vector autoregression framework to test for the Granger causality between discrimination and growth. A general, negative, bidirectional Granger causality is found between these two variables: in the long-run, discrimination reduces economic growth, and economic growth lowers discrimination. Also, we find that higher unemployment rates are associated with increased ethnic wage discrimination–in line with the predictions of Becker's theory of discrimination.

Suggested Citation

  • Asali, Muhammad & Gurashvili, Rusudan, 2019. "Labor Market Discrimination and the Macroeconomy," IZA Discussion Papers 12101, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp12101
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    References listed on IDEAS

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    Cited by:

    1. Larisa Stanila & Maria Denisa Vasilescu & Eva Militaru, 2020. "Investigating Labor Market Discrimination in Romania," Sustainability, MDPI, Open Access Journal, vol. 12(12), pages 1-19, June.
    2. 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.
    3. Muhammad Asali, 2021. "The New Performance Index: An application to COVID-19 era," Working Papers 003-21, International School of Economics at TSU, Tbilisi, Republic of Georgia.

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    More about this item

    Keywords

    labor market discrimination; transition economies; growth; granger causality;
    All these keywords.

    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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