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Wage Discrimination over the Business Cycle

Author

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  • Biddle, Jeff E.

    () (Michigan State University)

  • Hamermesh, Daniel S.

    () (Barnard College)

Abstract

Using CPS data from 1979-2009 we examine how cyclical downturns and industry-specific demand shocks affect wage differentials between white non-Hispanic men and women, Hispanics and non-Hispanic whites, and African-Americans and non-Hispanic whites. Women's relative earnings are harmed by negative shocks; the wage disadvantage of African-Americans drops with negative shocks, which have slight negative effects on Hispanics' relative wages. Negative shocks also increase the earnings disadvantage of bad-looking workers. A theory of job search suggests two opposite-signed mechanisms that affect these wage differentials. It suggests greater absolute effects among job-movers, which is verified using the longitudinal component of the CPS.

Suggested Citation

  • Biddle, Jeff E. & Hamermesh, Daniel S., 2012. "Wage Discrimination over the Business Cycle," IZA Discussion Papers 6445, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6445
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Pierre Deschamps & José de Sousa, 2014. "Labor Mobility and Racial Discrimination," Sciences Po publications 35, Sciences Po.
    2. Mary Eschelbach Hansen & Michael E. Martell, 2014. "Self-Identified Sexual Orientation and the Lesbian Earnings Differential," Working Papers 2014-13, American University, Department of Economics.
    3. Rulof Burger & Rachel Jafta & Dieter von Fintel, 2016. "Affirmative action policies and the evolution of post-apartheid South Africa's racial wage gap," WIDER Working Paper Series 066, World Institute for Development Economic Research (UNU-WIDER).
    4. Anton Nilsson, 2015. "Who suffers from unemployment? The role of health and skills," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-24, December.
    5. repec:lje:journl:v:22:y:2017:i:sp:p:199-231 is not listed on IDEAS
    6. David Neumark & Patrick Button, 2014. "Did Age Discrimination Protections Help Older Workers Weather the Great Recession?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 33(3), pages 566-601, June.
    7. Johnston, David W. & Lordan, Grace, 2016. "Racial prejudice and labour market penalties during economic downturns," European Economic Review, Elsevier, vol. 84(C), pages 57-75.
    8. Jahn, Elke J. & Rosholm, Michael, 2014. "Looking beyond the bridge: The effect of temporary agency employment on labor market outcomes," European Economic Review, Elsevier, vol. 65(C), pages 108-125.
    9. LIU Yang & KAWATA Keisuke, 2015. "Labor Market and the Native-Immigrant Wage Gap: Evidence from urban China," Discussion papers 15142, Research Institute of Economy, Trade and Industry (RIETI).
    10. Johnston, David W. & Lordan, Grace, 2014. "When work disappears: racial prejudice and recession labour market penalties," LSE Research Online Documents on Economics 56110, London School of Economics and Political Science, LSE Library.
    11. Hotchkiss, Julie L. & Moore, Robert E., 2018. "Some Like It Hot: Assessing Longer-Term Labor Market Benefits from a High-Pressure Economy," FRB Atlanta Working Paper 2018-1, Federal Reserve Bank of Atlanta.
    12. Carlsson, Magnus & Fumarco, Luca & Rooth, Dan-Olof, 2018. "Does Labor Market Tightness Affect Ethnic Discrimination in Hiring?," IZA Discussion Papers 11285, Institute for the Study of Labor (IZA).
    13. Joanna Tyrowicz & Lucas van der Velde, 2017. "When the opportunity knocks: large structural shocks and gender wage gaps," GRAPE Working Papers 2, GRAPE Group for Research in Applied Economics.
    14. Nathaniel Hilger, 2016. "Upward Mobility and Discrimination: The Case of Asian Americans," NBER Working Papers 22748, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    race; ethnicity; gender;

    JEL classification:

    • E29 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Other
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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