Working Paper: NBER ID: w17462
Authors: Roland G. Fryer Jr.; Devah Pager; Jörg L. Spenkuch
Abstract: The extent to which discrimination can explain racial wage gaps is one of the most divisive subjects in the social sciences. Using a newly available dataset, this paper develops a simple empirical test which, under plausible conditions, provides a lower bound on the extent of discrimination in the labor market. Taken at face value, our estimates imply that differential treatment accounts for at least one third of the black-white wage gap. We argue that the patterns in our data are consistent with a search-matching model in which employers statistically discriminate on the basis of race when hiring unemployed workers, but learn about their marginal product over time. However, we cannot rule out other forms of discrimination.
Keywords: discrimination; racial wage gaps; labor market
JEL Codes: J01; J15; J71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| differential treatment (J79) | black-white wage gap (J31) |
| previous wages (J31) | wage offers (J31) |
| racial discrimination (J71) | black-white wage gap (J31) |
| blacks have lower reservation wage (J79) | black-white wage gap (J31) |
| labor market experience (J29) | black-white wage gap (J31) |