Working Paper: NBER ID: w26319
Authors: Costas Cavounidis; Kevin Lang; Russell Weinstein
Abstract: African Americans face shorter employment durations than apparently similar whites. We hypothesize that employers discriminate in either acquiring or acting on ability-relevant information. We construct a model in which firms may "monitor" workers. Monitoring black but not white workers is self-sustaining: new black hires are more likely to have been screened by a previous employer, causing firms to discriminate in monitoring. We confirm the model's prediction that the unemployment hazard is initially higher for blacks but converges to that for whites. Two additional predictions, lower lifetime incomes and longer unemployment durations for blacks, are known to be strongly empirically supported.
Keywords: Labor Market Discrimination; Monitoring Practices; Employment Durations; Income Disparities
JEL Codes: J01; J3; J71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Monitoring black workers (J81) | Higher separation rate from employment (J63) |
| Higher separation rate from employment (J63) | Longer unemployment duration (J64) |
| Higher separation rate from employment (J63) | Lower lifetime incomes (J17) |
| Monitoring black workers (J81) | Longer unemployment duration (J64) |
| Monitoring black workers (J81) | Lower lifetime incomes (J17) |
| Unemployment hazard for black workers (J68) | Convergence with seniority (D79) |