IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/13661.html
   My bibliography  Save this paper

Prejudice and The Economics of Discrimination

Author

Listed:
  • Kerwin Kofi Charles
  • Jonathan Guryan

Abstract

This paper tests the predictions about the relationship between racial prejudice and racial wage gaps from Becker's (1957) seminal work on employer discrimination - something which has not previously been done in the large economics discrimination literature. Using rich data on racial prejudice from the General Social Survey, we find strong support for all of the key predictions from Becker about the relationship between prejudice and racial wage gaps. In particular, we show that, relative to white wages, black wages: (a) vary negatively with a measure of the prejudice of the "marginal" white in a state; (b) vary negatively with the prejudice in the lower tail of the prejudice distribution, but are unaffected by the prejudice of the most prejudiced persons in a state; and (c) vary negatively with the fraction of a state that is black. We show that these results are robust to a variety of extensions, including directly controlling for racial skill quality differences and instrumental variables estimates. We present some initial evidence to show that racial wage gaps are larger the more racially integrated is a state's workforce, also as Becker's model predicts. The paper also briefly discusses familiar criticisms and extensions of the standard Becker model, including an argument of our own which, like some recent work, shows that the model's main predictions can be shown theoretically to survive the effects of long run competition.

Suggested Citation

  • Kerwin Kofi Charles & Jonathan Guryan, 2007. "Prejudice and The Economics of Discrimination," NBER Working Papers 13661, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:13661
    Note: LS
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w13661.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Roland G. Fryer & Steven D. Levitt, 2004. "The Causes and Consequences of Distinctively Black Names," The Quarterly Journal of Economics, Oxford University Press, vol. 119(3), pages 767-805.
    2. Oettinger, Gerald S, 1996. "Statistical Discrimination and the Early Career Evolution of the Black-White Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 52-78, January.
    3. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
    4. Clark Nardinelli & Curtis Simon, 1990. "Customer Racial Discrimination in the Market for Memorabilia: The Case of Baseball," The Quarterly Journal of Economics, Oxford University Press, vol. 105(3), pages 575-595.
    5. James J. Heckman, 1998. "Detecting Discrimination," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 101-116, Spring.
    6. O'Neill, June, 1990. "The Role of Human Capital in Earnings Differences between Black and White Men," Journal of Economic Perspectives, American Economic Association, vol. 4(4), pages 25-45, Fall.
    7. Matthew S. Goldberg, 1982. "Discrimination, Nepotism, and Long-Run Wage Differentials," The Quarterly Journal of Economics, Oxford University Press, vol. 97(2), pages 307-319.
    8. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    9. Rosen, Sherwin, 1987. "The theory of equalizing differences," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 12, pages 641-692 Elsevier.
    10. Smith, James P & Welch, Finis R, 1989. "Black Economic Progress after Myrdal," Journal of Economic Literature, American Economic Association, vol. 27(2), pages 519-564, June.
    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. Matloob Piracha & Massimiliano Tani & Matias Vaira-Lucero, 2016. "Social capital and immigrants' labour market performance," Papers in Regional Science, Wiley Blackwell, vol. 95, pages 107-126, March.
    2. Lori Beaman & Raghabendra Chattopadhyay & Esther Duflo & Rohini Pande & Petia Topalova, 2009. "Powerful Women: Does Exposure Reduce Bias?," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1497-1540.
    3. Sami Miaari & Asaf Zussman & Noam Zussman, 2012. "Ethnic conflict and job separations," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 419-437, January.
    4. Ross Levine & Alexey Levkov & Yona Rubinstein, 2008. "Racial Discrimination and Competition," NBER Working Papers 14273, National Bureau of Economic Research, Inc.
    5. Kevin Lang & Jee-Yeon K. Lehmann, 2012. "Racial Discrimination in the Labor Market: Theory and Empirics," Journal of Economic Literature, American Economic Association, vol. 50(4), pages 959-1006, December.
    6. Harbaugh, Rick & To, Ted, 2014. "Opportunistic discrimination," European Economic Review, Elsevier, vol. 66(C), pages 192-204.
    7. Mergoupis, Thanos & Nandeibam, Shasikanta, 2014. "Wage discrimination and population composition in the long run," Economics Letters, Elsevier, vol. 122(3), pages 445-451.
    8. Oscar Molina Tejerina & Sergio Bobka Calcina, 2016. "Comercio internacional y brechas salariales no explicadas por género: Evidencia para el sector agrícola en Bolivia," Investigación & Desarrollo 0416, Universidad Privada Boliviana, revised Jun 2016.
    9. Castillo, Marco & Petrie, Ragan, 2010. "Discrimination in the lab: Does information trump appearance?," Games and Economic Behavior, Elsevier, vol. 68(1), pages 50-59, January.

    More about this item

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J7 - Labor and Demographic Economics - - Labor Discrimination

    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:nbr:nberwo:13661. 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: () or (Joanne Lustig). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    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.