Working Paper: NBER ID: w17326
Authors: Jeff Biddle; Daniel S. Hamermesh
Abstract: Using CPS data from 1979-2009 we examine how cyclical downturns and industry-specific demand shocks affect wage differentials between white non-Hispanic males and women, Hispanics and African-Americans. Women's and Hispanics' relative earnings are harmed by negative shocks, while the earnings disadvantage of African-Americans may drop with negative shocks. Negative shocks also appear to 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.
Keywords: wage discrimination; cyclical downturns; labor market; wage differentials
JEL Codes: E29; J71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher unemployment (J64) | wage disadvantage faced by women (J31) |
| higher unemployment (J64) | wage disadvantage for Hispanics (J79) |
| higher unemployment (J64) | wage disadvantage for Hispanic men (J79) |
| higher unemployment (J64) | wage disadvantage for Hispanic women (J79) |
| higher unemployment (J64) | wage disadvantage for African Americans (J79) |
| negative labor market shocks (F66) | earnings disadvantage of unattractive workers (J79) |
| job movers (J62) | dynamic response to labor market conditions (J29) |