Working Paper: NBER ID: w24791
Authors: Peter Q. Blair; Bobby W. Chung
Abstract: Among men, the black-white wage gap is as large today as it was in 1950. We test whether the black-white wage gap is due to asymmetric information using newly collected data on occupational licensing laws that ban workers with criminal records. We find evidence supporting this hypothesis. The licensing premiums for black men are largest in licensed occupations that restrict felons —particularly in states with Banthe-Box laws and at small firms. In these contexts where a worker’s criminal history is difficult to infer, we find that occupational licensing reduces asymmetric information and reduces the racial wage gap.
Keywords: occupational licensing; racial wage gap; asymmetric information; ban-the-box legislation
JEL Codes: D21; D82; D86; J24; J31; J70; K23; K31; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Occupational licensing (J44) | Racial wage gap (J79) |
| Occupational licensing (J44) | Information about criminal history (K14) |
| Information about criminal history (K14) | Racial wage gap (J79) |
| Occupational licensing (J44) | Licensing wage premium for black men (J79) |
| 'Ban-the-box' laws (J79) | Licensing premium for black men (D45) |
| Firm size (L25) | Value of license information for black men (J79) |