Working Paper: CEPR ID: DP5009
Authors: Harris Selod; Yves Zenou
Abstract: We consider a search-matching model in which black workers are discriminated against and the job arrival rates of all workers depend on social networks as well as distance to jobs. Location choices are mainly driven by the racial preferences of households. There are two possible urban equilibrium and, we show that, under some reasonable condition, all workers are better off in the equilibrium where blacks are close to jobs. We then consider two policies: affirmative action and employment subsidies to the firms that hire black workers. We show that, in cities where black workers reside far away from jobs, the optimal policy is to impose higher quotas or employment subsidies than in cities where they live close to jobs.
Keywords: Affirmative Action; Employment Subsidies; Racial Preferences; Social Networks; Spatial Mismatch
JEL Codes: J15; J41; R14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| urban segregation (R23) | spatial mismatch (R23) |
| spatial mismatch (R23) | higher unemployment rates for black workers (J68) |
| distance to jobs (R23) | job search efficiency for black workers (J68) |
| spatial match equilibrium (C62) | better labor market outcomes for all workers (J48) |
| affirmative action policies tailored to urban structure (J68) | reduced labor market discrimination (J70) |