Labor Earnings, Discrimination, and the Racial Composition of Jobs (original) (raw)
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Social Science Research, 2004
Using an unusually detailed definition of jobs (labor market-occupation-industry cells), I assess whether the Black-White wage gap increases as one ascends the wage hierarchy of local labor markets. Additionally, I test whether the tendency for Black-dominated jobs to pay less than other jobs is stronger among jobs that offer high pay relative to other jobs in the local labor market. There are several important results from the hierarchical linear models. First, there is a substantial net pay penalty associated with Black-dominated jobs, and there is some evidence that this penalty is stronger for Black workers than Whites. Second, the job racial composition effect is weaker among high-paying jobs. In contrast, the net pay gap within jobs is positively associated with the overall pay in a job, implying that ensuring equal access to high-paying jobs will only a partially ameliorate Black-White wage inequality.
Racial Wage Inequality: Job Segregation and Devaluation across U.S. Labor Markets
Despite decades of research showing greater black-white inequality in local areas where the black population is relatively large, little is known about the mechanisms for this effect. Using a unique data set of individuals nested within jobs across labor markets, this article tests two possible mechanisms for the black concentration effect on wage inequality: job segregation and devaluation. Results show that black population size is associated with greater segregation of black workers into black-dominated jobs. On the other hand, no evidence is found that the penalty for working in a black-dominated job (the devaluation effect) increases as a function of black population size. The article concludes that discrimination against workers—especially exclusion from better-paying jobs—is an important mechanism for the effect of black population size on the racial wage gap.
Segregated Jobs or Ethnic Niches? The Impact of Racialized Employment on Earnings Inequality
Research in Social Stratification and Mobility, 2007
Using data from the Multi-City Study of Urban Inequality (MCSUI), this study examines the extent to which the racial or ethnic composition of jobs affects racial and ethnic-linked earnings inequalities among whites, blacks and Hispanics. Four types of jobs are distinguished according to the racial/ethnic composition of jobs in work establishments: predominantly white, multi-racial or mixed, predominantly black, and predominantly Hispanic. We found considerable differences among the four types of jobs. Jobs composed predominantly of white workers are characterized by the highest earnings, the highest status occupations, and the highest levels of education. In contrast, jobs predominantly composed of Hispanic workers are characterized by the lowest salaries, the lowest status occupations, and the lowest levels of education. The data analysis supports the hypothesis that job segregation is responsible for earnings disparities in the case of blacks versus whites, but only partial support for this hypothesis is found in the case of Hispanics versus whites. The analysis also provides support for the “devaluation hypothesis” which suggests that all workers experience pay penalties in jobs in which minority workers are predominant. Further analysis reveals that had most workers been rewarded like whites employed in predominantly white jobs, their earnings would have increased considerably. The only groups of workers who “benefit” from job segregation are Hispanic workers employed in predominately Hispanic jobs. In the absence of competition with others, Hispanics employed in predominantly Hispanic jobs earn more than they would earn in other jobs. The differential effects of the ethnic composition of jobs on economic outcomes of minority populations are evaluated and discussed in light of the roles played by sheltered and protected ethnic economies.
Wages, racial composition, and quality sorting in labor markets
1994
This paper examines the relationship between wage rates and the racial composition of jobs, using large cross-sectional and longitudinal samples constructed from monthly Current Population Surveys for 1983-92. Support is found for a "quality sorting" model that posits an equilibrium in which the racial composition of jobs serves as a skill index of unmeasured labor quality. Estimation of standard wage-level equations shows that wages of both black and white workers are substantially lower in occupations with a high density of blacks. Consistent with the quality sorting hypothesis, the magnitude of the relationship is reduced sharply after accounting for occupational skill measures.
The Role of Location in Evaluating Racial Wage Disparity
SSRN Electronic Journal, 2000
A standard object of empirical analysis in labor economics is a modified Mincer wage function in which an individual's log wage is specified to be a function of education, experience, and an indicator variable identifying race. We analyze this approach in a context in which individuals live and work in different locations (and thus face different housing prices and wages). Our model provides a justification for the traditional approach, but with the important caveat that the regression should include location-specific fixed effects. Empirical analyses of men in U.S. labor markets demonstrate that failure to condition on location causes us to (i) overstate the decline in black-white wage disparity over the past 60 years, and (ii) understate racial and ethnic wage gaps that remain after taking into account measured cognitive skill differences that emerge when workers are young. JEL: J31, J71, R23.
Racial discrimination, labor markets, and development in the United States, an awkward relationship
Ioannis Vaitsis, 2022
This paper examines the wage differences between African Americans and whites for the years 1940, 1950 and 2018 respectively, in order to investigate if labor discrimination persists and if it is related to development. Using IPUMS Microdata it analyzes the evolution of the income differences among blacks and whites and examines if labor discrimination affects the macroeconomic outcome across and within Northeast and South regions of the United States. Racial discrimination between black and white people seems to be more persistent in the South, the GDP per capita is lower today mostly in the States where race discrimination in labour market was more pervasive. Regions with higher race discrimination traits in the labour market today illustrate relatively lower development and growth indexes. The race gap in wages today is significantly lower, but it continues, and it is more significant in South since the time that Roosevelt tried to implement the first antidiscrimination effort in 1940. Results are much better in the Northeast, not only concerning the race gap in wages, but also in terms of the GDP per capita, divisions with increased discrimination illustrate relative lower economic outcome.
International Economic Review, 2003
This article presents the structural estimation of the parameters of a statistical discrimination model. Although the model is capable of displaying multiple equilibria, an estimation strategy that identifies both the model parameters and the equilibrium selected by the economic agents is developed and empirically implemented. A comparison between the selected equilibria and the other potential equilibria reveals that the decline in wage inequality experienced in the U.S. economy cannot be attributed to changes in the equilibrium selection. Nonetheless, a counterfactual experiment shows that in a color-blind society blacks' wage would have been on average more than 20% higher. * Manuscript his invaluable advice and encouragement. I also received help and useful comments from .
Black–White Wage Differentials in a Multiple Sample Selection Bias Model
Atlantic Economic Journal, 2008
This paper simultaneously incorporates two sources of selection bias in the black-white wage equations. It demonstrates that the biases due to an individual's propensity to be in the labor force and the firm's hiring practices are important in determining the black-white wage differential and failure to account for both biases will result in inaccurate estimation of the black-white wage differential. The results indicate a moderate contribution (4.3 percent) of the selectivity biases variables to the wage differential between blacks and whites. The results also show that the black-white wage differential for all black and white workers and across gender decreases as more sources of selection bias are identified and incorporated in the wage equation. The implication is that the observed unadjusted black and white wage gap may be overstated if the wage equation is not adjusted for selection bias. We found that adjusting for double selection bias in the wage equation, the black-white female wage gap is 26 percent larger than the black-white male wage gap, and 12.1 percent larger when we adjust for a single selection bias. The small total effect values of the selection bias due to an individual's participation decision indicate that the black and white labor force participation decisions may be similar, while the black-white participation decisions may differ. The results seem to suggest that at the macro level, the enforcement of policies related to racial issues in the labor market will likely lead to a reduction in the black-white wage gap. Also, policies designed to encourage black males' labor force participation and enforcement of anti-discriminatory laws may be effective in reducing the black-white male's wage differential.
Racial Discrimination in the Labor Market: Theory and Empirics
Journal of Economic Literature, 2012
We review theories of race discrimination in the labor market. Taste-based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread, but no existing model explains the unemployment rate differential. Models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment. At their current state of development, models of statistical discrimination based on rational stereotypes have little empirical content. It is plausible that models combining elements of the search models with statistical discrimination could fit the data. We suggest possible avenues to be pursued and comment briefly on the implication of existing theory for public policy.