Discrimination and Skill Differences in an Equilibrium Search Model
In this paper we analyze an equilibrium search model with three sources for wage and unemployment differentials among workers with the same (observed) human capital but different appearance (race): unobserved productivity (skill), search intensities and discrimination (Becker 1957) due to an appearance-based employer disutility factor. Because they affect the earnings distributions differently, empirical identification of these potential sources for the explanation of wage and unemployment differentials is possible. We show that the structural parameters of the model, including the firm's disutility from certain workers, are identifiable using standard labor market survey data. We demonstrate identification using data from the National Longitudinal Survey of Youth. Estimation of these parameters by matching moments from a sample of black and white high school graduates implies: a) blacks have a 9% lower productivity level than whites; b) the disutility factor in employer's preferences is one-third of the white's productivity level; and c) 50% of firms have a disutility factor in their utility toward blacks.
|Date of creation:||Oct 1998|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, Reference Centre, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2|
Phone: 519-661-2111 Ext.85244
Web page: http://economics.uwo.ca/research/research_papers/department_working_papers.html
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gerard J. van den Berg & Geert Ridder, 1998.
"An Empirical Equilibrium Search Model of the Labor Market,"
Econometric Society, vol. 66(5), pages 1183-1222, September.
- Berg, G.J. & Ridder, G., 1993. "An empirical equilibrium search model of the labour market," Serie Research Memoranda 0039, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
- Derek A. Neal & William R. Johnson, 1995.
"The Role of Pre-Market Factors in Black-White Wage Differences,"
NBER Working Papers
5124, National Bureau of Economic Research, Inc.
- 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 869-95, October.
- Michael Sattinger, 1993.
"Statistical Discrimination with Employment Criteria,"
93-01, University at Albany, SUNY, Department of Economics.
- Sattinger, Michael, 1998. "Statistical Discrimination with Employment Criteria," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 205-37, February.
- C, Bontemps & Jean-Marc Robin & G, Van Den Berg, 1997. "Equilibrium Search with Productivity Dispersion : Theory and Estimation," Working Papers 97-09, Centre de Recherche en Economie et Statistique.
- Coate, Stephen & Loury, Glenn C, 1993.
"Will Affirmative-Action Policies Eliminate Negative Stereotypes?,"
American Economic Review,
American Economic Association, vol. 83(5), pages 1220-40, December.
- Coate, S. & Loury, G.C., 1992. "Will Affirmative Action Policies Eliminate Negative Stereotypes?," Papers 3, Boston University - Department of Economics.
- Gerard J. van den Berg, 1998.
"Empirical Inference with Equilibrium Search Models of the Labor Market,"
Tinbergen Institute Discussion Papers
98-089/3, Tinbergen Institute.
- van den Berg, Gerard J, 1999. "Empirical Inference with Equilibrium Search Models of the Labour Market," Economic Journal, Royal Economic Society, vol. 109(456), pages F283-306, June.
- Black, Dan A, 1995. "Discrimination in an Equilibrium Search Model," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 309-33, April.
- Donohue, John J, III & Heckman, James, 1991.
"Continuous versus Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks,"
Journal of Economic Literature,
American Economic Association, vol. 29(4), pages 1603-43, December.
- John J. Donohue III & James Heckman, 1991. "Continuous Versus Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks," NBER Working Papers 3894, National Bureau of Economic Research, Inc.
- Bowlus, Audra J & Kiefer, Nicholas M & Neumann, George R, 1995. "Estimation of Equilibrium Wage Distributions with Heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(S), pages S119-31, Suppl. De.
- Hellerstein, J-K & Neumark, D, 1995.
"Sex, Wages, and Productivity : an Empirical Analysis of Israeli, Firm-Level Data,"
9501, Michigan State - Econometrics and Economic Theory.
- Hellerstein, Judith K & Neumark, David, 1999. "Sex, Wages, and Productivity: An Empirical Analysis of Israeli Firm-Level Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 95-123, February.
- Dale T. Mortensen, 1988. "Equilibrium Wage Distrihutions: A Synthesis," Discussion Papers 811, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Bowlus, A.J., 1995.
"A Search Interpretation of Male-Female Wage Differentials,"
UWO Department of Economics Working Papers
9504, University of Western Ontario, Department of Economics.
- Bowlus, Audra J, 1997. "A Search Interpretation of Male-Female Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 625-57, October.
- Zvi Eckstein & Kenneth I. Wolpin, 1999. "Estimating The Effect Of Racial Discrimination On First Job Wage Offers," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 384-392, August.
When requesting a correction, please mention this item's handle: RePEc:uwo:uwowop:9802. 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: ()
If references are entirely missing, you can add them using this form.