The Uneven Geography of Racial and Ethnic Wage Inequality: Specifying Local Labor Market Effects

Abstract

This article extends research on intermetropolitan and regional wage inequality through an investigation of the uneven geography of racial and ethnic wage inequality across metropolitan labor markets. Prior geographic studies largely restricted analysis of the source of intermetropolitan wage disparities to differences in industrial structure. The study described in this article further expands the analysis of labor market effects by conceptually describing and empirically analyzing the effects of three significant racial labor market institutions: public employment, unionization, and the penal system. I investigate these effects as part of a more extensive analysis of how local labor market structure—comprised of industrial mix, demographic composition, and institutional and regulatory arrangements—matters in mediating racial wage inequality. I use data from the 2000 U.S. Census and multilevel methods to analyze the wage differentials of African American and native- and foreign-born Latino men relative to whites across 186 U.S. metropolitan areas. Local labor market structure mediates different types of racial wage inequality in distinct ways: Regulatory context matters most for the relative wages of African Americans; both regulatory context and industrial mix influence the relative wages of native-born Latinos; and industrial composition matters most for the relative wages of foreign-born Latinos. Against these broad patterns of difference, not all effects—especially regulatory and institutional effects—are singularly group specific. Unionization shores up wages for both white and black high school–educated workers and mitigates racial wage inequality. Higher minimum wage rates boost the relative wages of high school–educated whites and native-born Latinos.