Racial Differences in the Employment Policy of State and Local Governments: The Case of Male Workers

Abstract

Although increased political participation of minorities has been an important aspect of the civil rights movement, few studies have examined the effect of race-based political participation on employment discrimination. A number of studies provide evidence that minorities earn significantly less than comparably skilled whites in the federal government and that less wage exists in the federal sector [3; 11; 15]. Borjas argues and provides empirical support that this results from a vote-maximizing government that uses its hiring decisions to mollify an electorate with a for [6; 7]. While Borjas provides a valuable framework to analyze government employment policy, he overlooks the interaction between public and private sector hiring decisions and excludes state and local government employees (SLGs) that account for four fifths of public sector employment. In this paper, I extend the analysis by not only incorporating state and local government, but also by modeling public and private sector interactions. Rather than adopting a taste for discrimination to explain racial patterns in public wages and employment, I develop a public choice model where racial constituencies compete for economic rents from the provision of local public goods. Estimates of the black-white wage differential for male workers in each state are found to be consistently smaller for state and local government than the private sector. I show that this finding is consistent with the hypothesis of a vote-maximizing government responding to the political clout of rent-seeking racial interest groups. In particular, this paper provides the first evidence that racial groups may raise their relative wage in the public sector by increasing their voter participation relative to other racial groups; I also argue that the apparent joint effect of segregation and relative political participation on the relative wage distinguishes the hypothesis of competition for local public goods from its alternatives. In addition, the incorporation of a publicprivate sector interaction suggests that the private sector wage differentials are not simply passed forward to the public sector. In the theoretical model, I hypothesize that two racial interest groups (black and white) compete for government employment as a means of determining the allocation of local public goods