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Wage Discrimination over the Business Cycle

Author

Listed:
  • Biddle, Jeff E.

    (University of Notre Dame)

  • Hamermesh, Daniel S.

    (University of Texas at Austin)

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 of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6445
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    References listed on IDEAS

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    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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