The role of labor discrimination in spatial sorting: the USA as an example of ethnic groups staying apart

Abstract

AbstractDespite the vast research about discrimination, there is little evidence about how space interacts with it. Our main hypothesis is that a discriminated group could have incentives to stay together, even if the location is less dynamic—avoiding areas where firms do not usually hire workers of their group. A virtuous and/or vicious circle emerges for each group, even in the long run. Using USA as an example, this article introduces a theoretical economic model to explain the incentives of ethnic groups in terms of location. We extend the well-known model of discrimination with imperfect information to a spatial framework. The results seem to indicate that the initial population distribution and the barriers to agglomerate activity (transport costs), as well as the behavior of employees, are key elements to determine the equilibrium. As a general conclusion, discrimination processes could clearly modify the location pattern of the population. Hence, the discriminated group could suffer from lower incentives to move from non-agglomerated areas to dynamic areas. These processes could help to explain why some populations prefer to maintain their traditional location in poor areas even if there are places with higher wages or better quality of life.