IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp3814.html
   My bibliography  Save this paper

Car Ownership and the Labor Market of Ethnic Minorities

Author

Listed:
  • Gautier, Pieter A.

    () (Vrije Universiteit Amsterdam)

  • Zenou, Yves

    () (Monash University)

Abstract

We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labor-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the initial wealth difference, blacks cannot afford cars while whites can. Car ownership allows whites to reach more jobs per unit of time and this gives them a better bargaining position. As a result, in equilibrium, blacks end up with both higher unemployment rates and lower wages than whites. Furthermore, it takes more time for blacks to reach their jobs even though they travel less miles. Those predictions are consistent with the data. Better access to capital markets or better public transportation will reduce the differences in labor market outcomes.

Suggested Citation

  • Gautier, Pieter A. & Zenou, Yves, 2008. "Car Ownership and the Labor Market of Ethnic Minorities," IZA Discussion Papers 3814, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3814
    as

    Download full text from publisher

    File URL: http://ftp.iza.org/dp3814.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, January.
    2. Zenou,Yves, 2009. "Urban Labor Economics," Cambridge Books, Cambridge University Press, number 9780521698221, October.
    3. Hamilton, Jonathan & Thisse, Jacques-Francois & Zenou, Yves, 2000. "Wage Competition with Heterogeneous Workers and Firms," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 453-472, July.
    4. Calvo-Armengol, Antoni & Zenou, Yves, 2005. "Job matching, social network and word-of-mouth communication," Journal of Urban Economics, Elsevier, vol. 57(3), pages 500-522, May.
    5. Manning, Alan, 2003. "The real thin theory: monopsony in modern labour markets," Labour Economics, Elsevier, vol. 10(2), pages 105-131, April.
    6. Zenou, Yves, 2007. "Social Interactions and Labour Market Outcomes in Cities," CEPR Discussion Papers 6129, C.E.P.R. Discussion Papers.
    7. Holzer, Harry J, 1987. "Informal Job Search and Black Youth Unemployment," American Economic Review, American Economic Association, vol. 77(3), pages 446-452, June.
    8. Harry J. Holzer & John M. Quigley & Steven Raphael, 2003. "Public transit and the spatial distribution of minority employment: Evidence from a natural experiment," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(3), pages 415-441.
    9. Sato, Yasuhiro, 2004. "City structure, search, and workers' job acceptance behavior," Journal of Urban Economics, Elsevier, vol. 55(2), pages 350-370, March.
    10. Dale T. Mortensen, 1982. "The Matching Process as a Noncooperative Bargaining Game," NBER Chapters,in: The Economics of Information and Uncertainty, pages 233-258 National Bureau of Economic Research, Inc.
    11. Marimon, Ramon & Zilibotti, Fabrizio, 1997. "Unemployment versus Mismatch of Talents: Reconsidering Unemployment Benefits," CEPR Discussion Papers 1769, C.E.P.R. Discussion Papers.
    12. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627 Elsevier.
    13. Edward L. Glaeser & Matthew E. Kahn, 2001. "Decentralized Employment and the Transformation of the American City," Harvard Institute of Economic Research Working Papers 1912, Harvard - Institute of Economic Research.
    14. Ihlanfeldt, Keith R. & Scafidi, Benjamin, 2002. "Black Self-Segregation as a Cause of Housing Segregation: Evidence from the Multi-City Study of Urban Inequality," Journal of Urban Economics, Elsevier, vol. 51(2), pages 366-390, March.
    15. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
    16. Jan K. Brueckner & Yves Zenou, 2003. "Space and Unemployment: The Labor-Market Effects of Spatial Mismatch," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 242-262, January.
    17. Ayres, Ian & Siegelman, Peter, 1995. "Race and Gender Discrimination in Bargaining for a New Car," American Economic Review, American Economic Association, vol. 85(3), pages 304-321, June.
    18. Jan K. Brueckner & Jacques-FranÁois Thisse & Yves Zenou, 2002. "Local Labor Markets, Job Matching, and Urban Location," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 155-171, February.
    19. Glaeser, Edward L. & Kahn, Matthew E., 2004. "Sprawl and urban growth," Handbook of Regional and Urban Economics,in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 56, pages 2481-2527 Elsevier.
    20. Small, Kenneth A. & Gomez-Ibanez, Jose A., 1999. "Urban transportation," Handbook of Regional and Urban Economics,in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 46, pages 1937-1999 Elsevier.
    21. Marimon, Ramon & Zilibotti, Fabrizio, 1999. "Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits," Economic Journal, Royal Economic Society, vol. 109(455), pages 266-291, April.
    22. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259 Elsevier.
    23. Steven Raphael & Michael A. Stoll, 2000. "Can Boosting Minority Car-Ownership Rates Narrow Inter-Racial Employment Gaps," JCPR Working Papers 200, Northwestern University/University of Chicago Joint Center for Poverty Research.
    24. Edward L. Glaeser & Matthew E. Kahn & Jordan Rappaport, 2000. "Why Do The Poor Live In Cities?," Harvard Institute of Economic Research Working Papers 1891, Harvard - Institute of Economic Research.
    25. Edward N. Wolff, 1998. "Recent Trends in the Size Distribution of Household Wealth," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 131-150, Summer.
    26. Coulson, N Edward & Laing, Derek & Wang, Ping, 2001. "Spatial Mismatch in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 949-972, October.
    27. Neal, Derek, 2006. "Why Has Black-White Skill Convergence Stopped?," Handbook of the Economics of Education, Elsevier.
    28. Raphael, Steven & Rice, Lorien, 2002. "Car ownership, employment, and earnings," Journal of Urban Economics, Elsevier, vol. 52(1), pages 109-130, July.
    29. Pieter A. Gautier & Coen N. Teulings & Aico van Vuuren, 2005. "On-the-Job Search and Sorting," Tinbergen Institute Discussion Papers 05-070/3, Tinbergen Institute.
    30. Antoni Calvó-Armengol & Matthew O. Jackson, 2004. "The Effects of Social Networks on Employment and Inequality," American Economic Review, American Economic Association, vol. 94(3), pages 426-454, June.
    31. O'Regan, Katherine M. & Quigley, John M., 1998. "Cars for the Poor," University of California Transportation Center, Working Papers qt72d104xt, University of California Transportation Center.
    32. Stephen L. Ross & John Yinger, 2002. "The Color of Credit: Mortgage Discrimination, Research Methodology, and Fair-Lending Enforcement," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182289, January.
    33. Gary A. Dymski, 2006. "Discrimination in the Credit and Housing Markets: Findings and Challenges," Chapters,in: Handbook on the Economics of Discrimination, chapter 8 Edward Elgar Publishing.
    34. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    35. Zax, Jeffrey S & Kain, John F, 1996. "Moving to the Suburbs: Do Relocating Companies Leave Their Black Employees Behind?," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 472-504, July.
    36. Finis Welch, 2003. "Catching Up: Wages of Black Men," American Economic Review, American Economic Association, vol. 93(2), pages 320-325, May.
    37. Christopher Mayer & Karen Pence & Shane M. Sherlund, 2009. "The Rise in Mortgage Defaults," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 27-50, Winter.
    38. Jan K. Brueckner, 2000. "Urban Sprawl: Diagnosis and Remedies," International Regional Science Review, , vol. 23(2), pages 160-171, April.
    39. Stoll, Michael A., 1999. "Spatial Job Search, Spatial Mismatch, and the Employment and Wages of Racial and Ethnic Groups in Los Angeles," Journal of Urban Economics, Elsevier, vol. 46(1), pages 129-155, July.
    40. Gautier, Pieter A, 2002. "Unemployment and Search Externalities in a Model with Heterogeneous Jobs and Workers," Economica, London School of Economics and Political Science, vol. 69(273), pages 21-40, February.
    41. Madden, Janice Fanning, 1985. "Urban wage gradients: Empirical evidence," Journal of Urban Economics, Elsevier, vol. 18(3), pages 291-301, November.
    42. Holzer Harry J. & Ihlanfeldt Keith R. & Sjoquist David L., 1994. "Work, Search, and Travel among White and Black Youth," Journal of Urban Economics, Elsevier, vol. 35(3), pages 320-345, May.
    43. Baum, Charles L., 2009. "The effects of vehicle ownership on employment," Journal of Urban Economics, Elsevier, vol. 66(3), pages 151-163, November.
    44. Smith, Tony E. & Zenou, Yves, 2003. "Spatial mismatch, search effort, and urban spatial structure," Journal of Urban Economics, Elsevier, vol. 54(1), pages 129-156, July.
    45. Kerwin Kofi Charles & Erik Hurst, 2002. "The Transition To Home Ownership And The Black-White Wealth Gap," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 281-297, May.
    46. Thomas J. Nechyba & Randall P. Walsh, 2004. "Urban Sprawl," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 177-200, Fall.
    47. Patacchini, Eleonora & Zenou, Yves, 2005. "Spatial mismatch, transport mode and search decisions in England," Journal of Urban Economics, Elsevier, vol. 58(1), pages 62-90, July.
    48. Q Shen, 1998. "Location characteristics of inner-city neighborhoods and employment accessibility of low-wage workers," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 25(3), pages 345-365, May.
    49. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    50. LeRoy, Stephen F. & Sonstelie, Jon, 1983. "Paradise lost and regained: Transportation innovation, income, and residential location," Journal of Urban Economics, Elsevier, vol. 13(1), pages 67-89, January.
    51. Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
    52. Barsky R. & Bound J. & Charles K.K. & Lupton J.P., 2002. "Accounting for the Black-White Wealth Gap: A Nonparametric Approach," Journal of the American Statistical Association, American Statistical Association, vol. 97, pages 663-673, September.
    53. Sasaki, Komei, 1990. "Income class, modal choice, and urban spatial structure," Journal of Urban Economics, Elsevier, vol. 27(3), pages 322-343, May.
    54. Gurley, Tami & Bruce, Donald, 2005. "The effects of car access on employment outcomes for welfare recipients," Journal of Urban Economics, Elsevier, vol. 58(2), pages 250-272, September.
    55. Robert W. Wassmer, 2008. "Causes of Urban Sprawl in the United States: Auto reliance as compared to natural evolution, flight from blight, and local revenue reliance," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(3), pages 536-555.
    56. Edward L Glaeser & Jesse M Shapiro, 2003. "Urban Growth in the 1990s: Is City Living Back?," Journal of Regional Science, Wiley Blackwell, vol. 43(1), pages 139-165.
    57. Harry J. Holzer & Keith R. Ihlanfeldt, 1996. "Spatial factors and the employment of blacks at the firm level," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 65-86.
    58. Seater, John J, 1979. "Job Search and Vacancy Contacts," American Economic Review, American Economic Association, vol. 69(3), pages 411-419, June.
    59. Duncan Black & Vernon Henderson, 1997. "Urban Growth," NBER Working Papers 6008, National Bureau of Economic Research, Inc.
    60. Sato, Yasuhiro, 2001. "Labor Heterogeneity in an Urban Labor Market," Journal of Urban Economics, Elsevier, vol. 50(2), pages 313-337, September.
    61. Kerwin Kofi Charles & Erik Hurst & Melvin Stephens, 2008. "Rates for Vehicle Loans: Race and Loan Source," American Economic Review, American Economic Association, vol. 98(2), pages 315-320, May.
    62. Schwartz, Aba, 1976. "Migration, Age, and Education," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 701-719, August.
    63. Samuel L. Myers & Chanjin Chung & Lisa Saunders, 2001. "Racial Differences in Transportation Access to Employment in Chicago and Los Angeles, 1980 and 1990," American Economic Review, American Economic Association, vol. 91(2), pages 174-177, May.
    64. Glaeser, Edward L. & Kahn, Matthew E. & Rappaport, Jordan, 2008. "Why do the poor live in cities The role of public transportation," Journal of Urban Economics, Elsevier, vol. 63(1), pages 1-24, January.
    65. Paul M. Ong, 2002. "Car ownership and welfare-to-work," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(2), pages 239-252.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vincent Boitier, 2013. "Endogenous city size in urban search models: the case of high reallocation costs," ERSA conference papers ersa13p590, European Regional Science Association.
    2. Gobillon, Laurent & Rupert, Peter & Wasmer, Etienne, 2014. "Ethnic unemployment rates and frictional markets," Journal of Urban Economics, Elsevier, vol. 79(C), pages 108-120.
    3. Olof Åslund & John Östh & Yves Zenou, 2010. "How important is access to jobs? Old question--improved answer," Journal of Economic Geography, Oxford University Press, vol. 10(3), pages 389-422, May.
    4. Peter Ruppert & Elena Stancanelli & Etienne Wasmer, 2009. "Commuting, Wages and Bargaining Power," Annals of Economics and Statistics, GENES, issue 95-96, pages 201-220.
    5. Phillips, David C., 2014. "Getting to work: Experimental evidence on job search and transportation costs," Labour Economics, Elsevier, vol. 29(C), pages 72-82.
    6. repec:wly:econjl:v:125:y:2015:i:586:p:f82-f114 is not listed on IDEAS
    7. Emmanuel Duguet & David Gray & Yannick L'Horty & Loïc du Parquet & Pascale Petit, 2017. "Labor Market Effects of Urban Riots:an experimental assessment," TEPP Working Paper 2017-03, TEPP.
    8. Rune Vejlin, 2013. "Residential Location, Job Location, and Wages: Theory and Empirics," LABOUR, CEIS, vol. 27(2), pages 115-139, June.
    9. Tito Boeri & Marta De Philippis & Eleonora Patacchini & Michele Pellizzari, 2015. "Immigration, Housing Discrimination and Employment," Economic Journal, Royal Economic Society, vol. 125(586), pages 82-114, August.
    10. Mikhed, Vyacheslav & Scholnick, Barry, 2015. "Who is screened out of social insurance programs by entry barriers? Evidence from consumer bankruptcies," Working Papers 15-40, Federal Reserve Bank of Philadelphia.
    11. Zenou, Yves, 2009. "Urban search models under high-relocation costs. Theory and application to spatial mismatch," Labour Economics, Elsevier, vol. 16(5), pages 534-546, October.
    12. Lehmann, Etienne & Montero Ledezma, Paola L. & Linden, Bruno Van der, 2016. "Workforce location and equilibrium unemployment in a duocentric economy with matching frictions," Journal of Urban Economics, Elsevier, vol. 91(C), pages 26-44.
    13. repec:bla:presci:v:96:y:2017:i::p:s91-s112 is not listed on IDEAS
    14. Åslund, Olof & Blind, Ina & Dahlberg, Matz, 2017. "All aboard? Commuter train access and labor market outcomes," Regional Science and Urban Economics, Elsevier, vol. 67(C), pages 90-107.
    15. Deokrye Baek, 2013. "The Effect of Public Transportation Accessibility on Food Insecurity," Departmental Working Papers 2013-02, Department of Economics, Louisiana State University.
    16. Ellickson, Paul B. & Grieco, Paul L.E., 2013. "Wal-Mart and the geography of grocery retailing," Journal of Urban Economics, Elsevier, vol. 75(C), pages 1-14.
    17. Bonin, Holger & Rinne, Ulf, 2017. "Machbarkeitsstudie zur Durchführung einer Evaluation der arbeitsmarktpolitischen Integrationsmaßnahmen für Flüchtlinge," IZA Research Reports 76, Institute for the Study of Labor (IZA).
    18. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers 0120, Spatial Economics Research Centre, LSE.
    19. Mikhed, Vyacheslav & Scholnick, Barry, 2014. "Financial benefits, travel costs, and bankruptcy," Working Papers 14-18, Federal Reserve Bank of Philadelphia.
    20. Yip, Chi Man, 2011. "Size and The City: Productivity, Match Quality and Wage Inequality," MPRA Paper 31255, University Library of Munich, Germany.
    21. Zenou, Yves, 2009. "Search in cities," European Economic Review, Elsevier, vol. 53(6), pages 607-624, August.
    22. repec:spo:wpecon:info:hdl:2441/10031 is not listed on IDEAS

    More about this item

    Keywords

    job search; multiple job centers; spatial labor markets; ethnic minorities; transportation mismatch;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp3814. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak). General contact details of provider: http://www.iza.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.