Racial Wage Gap Research Articles

Racial Wage Gaps: The Role of Private Schooling, Technical Education and Graduate Degrees

Racial Wage Gaps: The Role of Private Schooling, Technical Education and Graduate Degrees

Strikes and stones: stone quarries in the Southern Triangle as a site for shaping ethnic segregation, industrial relations, and labor militancy in Israel, 1949-1952

ABSTRACT In the early years following Israel’s establishment, the country’s stone industry was set to advance key Zionist objectives: supplying construction materials to house Jewish immigrants and creating employment opportunities for them. However, this policy faced a significant challenge when quarry owners preferred to hire cheaper, unorganized Palestinian workers. This was particularly pronounced in the Southern Triangle region, where Palestinians lived in close proximity to Israeli Jewish urban centers. These Palestinian quarry workers, who were compelled to endure harsh working conditions, discrimination, and exploitation, are the focus of this article. By focusing on Palestinian quarry workers in the Southern Triangle between 1949–1952, the article aims to explore the origins of the political and economic inferiority of Palestinians in Israel. It delves into how this inferiority was constructed and the underlying motivations. Furthermore, the article uncovers previously overlooked Palestinian labor mobilization in the face of rigid oppression by employers and the state. This mobilization, it is argued, led to a shift in government and labor union policies towards Palestinians – from establishing and justifying a racial wage gap between Jewish and Palestinian workers to striving for wage standardization.

The effect of Black-White income inequality on perceived interracial psychological outcomes via perceived interracial competition.

This research examined the influence of Black-White income inequality on negative interracial psychological outcomes and the role of perceived interracial competition as a mediational mechanism. The research utilized three different designs across three preregistered experiments to assess the proposed processes. Study 1 (N = 846) used a measurement-of-mediation design and found that participants assigned to the high racial income gap condition reported more perceived interracial competition, discrimination, avoidance, and anxiety relative to those in the low racial income gap condition. Effects were mediated by increased perceptions of interracial competition. Studies 2a (n = 827) and 2b (n = 841) used an experimental-causal-chain design and replicated the effect of the racial income gap condition on increased perceptions of interracial competition (Study 2a) and showed that participants in the high perceived interracial competition condition-the manipulated mechanism-exhibited greater perceived discrimination, anxiety, and mistrust relative to those in the low perceived interracial competition condition (Study 2b). Study 3 (N = 1,583) diversified the sample by recruiting similar numbers of Black (n = 796) and White (n = 787) participants and used a moderation-of-process design by simultaneously manipulating the racial income gap and perceived interracial competition. Competition moderated effects: Inequality effects were stronger for those in the high competition condition. Implications for theory development are discussed. (PsycInfo Database Record (c) 2023 APA, all rights reserved).

Revising the Racial Wage Gap Among Men in the United States: The Role of Nonemployment, Underemployment, and Incarceration

This article examines trends in racial earnings disparities to observe how the socially constructed concept of race impacts the U.S. labor market for men from 1981 to 2008. I develop a racial earnings gap measure that accounts for the labor market experience of the nonemployed using Survey of Income and Program Participation (SIPP) Completed Gold Standard data produced by the U.S. Census Bureau. This data set includes administrative earnings data from the Internal Revenue Service and the Social Security Administration merged with SIPP household survey data. Conventional measures that do not account for the nonemployed miss the impact of an increasing number of nonemployed, prime working-age men, particularly Black men, and the accelerating incarceration rate during the 1980s-1990s. An unadjusted estimate of the White earnings premium indicates a large racial earnings gap that fluctuates between about 140% and 150% over 1981-2008. This suggests that labor market conditions and policies may be limiting, but not reducing, racial earnings inequality. The adjusted White earnings premium averages 28 percentage points higher over the time period of this study. The premium also rises further, more quickly, and sustains this higher level longer. The adjusted measure suggests that labor market conditions and policies continue to produce growing levels of racial earnings inequality.

Racial inequality in frictional labor markets: Evidence from minimum wages

We provide the first causal analysis of how state and federal minimum wage policies in the U.S. have affected labor market frictions and racial wage gaps. Using stacked event studies, binned difference-in-differences estimators, within-person analyses and classic panel methods, we find that minimum wages increased wages of black workers between 16 and 64% more than among white workers and reduced the overall black-white wage gap by 10% (and by 56% among workers most affected by the policies). Racial differences in initial wages cannot explain this differential effect. Rather, minimum wages expand job opportunities for black workers more than for white workers. We present a model with labor market frictions in which minimum wages expand the job search radius of workers who do not own automobiles and who live farther from jobs. Our causal results using the ACS show that minimum wages increase commuting via automobile among black workers but not among white workers, supporting our model. Minimum wages also reduce racial gaps in separations and hires, further suggesting the policies especially enhance job opportunities for black workers.

The (In)Flexibility of Racial Discrimination: Labor Market Context and the Racial Wage Gap in the United States, 2000 to 2021

Does racial wage discrimination increase during economic downturns? In this article, the author tests empirically the association between economic conditions and racial wage discrimination for black, Hispanic, and Asian workers. Using data from the Current Population Survey, the author finds that the wage gap between Hispanics and whites, and between Asians and whites, increases with the job-seeker rate and unemployment rate. However, the wage gap between black and white workers increases slightly with the unemployment rate and does not change at all with the job-seeker rate. The author advances the concept of “wage discrimination flexibility” to argue that racial wage discrimination against black workers is more rigid and resistant to changes in economic environments, whereas wage discrimination against Hispanics and Asians is more flexible and responsive to economic conditions. The author discusses the implications of these findings for theories of discrimination and for policies aiming to foster equal opportunities in the labor market.

Job Market Signaling through Occupational Licensing

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 Ban-the-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.

Worse than a double whammy: The intersectional causes of wage inequality between women of colour and White men over time

AbstractWe evaluate the causes of the wage gap at the intersection of race, ethnicity and gender over time in the United States. We analyse the wage gaps for women of colour along three dimensions: relative to White women, relative to men of their respective race/ethnicity, and relative to White men. Using the American Community Survey, we replicate earlier findings based on the Current Population Survey data which show that, on average, Black women face an unexplained wage gap relative to White men that goes beyond the simple addition of the separate unexplained gender and racial wage gaps. This can be seen persistently between 1980 and 2019, and we find it is true across the entire wage distribution but especially notable at higher centiles. From 1990 through 2019, Black and Hispanic women saw stalled progress, while White women continued to make steady progress closing the wage gap relative to White men.

Perception and privilege

Inequality perceptions differ along racial and gendered lines. To explain these disparities, we propose an agent-based model of localised perceptions of the gender and racial wage gap in networks. We show that the combination of homophilic graph formation and estimation based on locally limited knowledge can replicate both the underestimation of the gender or racial wage gap that empirical studies find and the well-documented fact that the underprivileged perceive the wage gap to be higher on average and with less bias. Similarly, we demonstrate that the underprivileged perceive overall inequality to be higher on average. In contrast to this qualitative replication, we also show that the effect of homophilic graph formation is quantitatively too strong to account for the empirically observed effect sizes within a recent Israeli sample on perceived gender wage gaps. As a parsimonious extension, we let agents estimate using a composite signal based on local and global information. Our calibration suggests that women place much more weight on the (correct) global signal than men, in line with psychological evidence that people adversely affected by group-based inequities pay more attention to global information about the issue. Our findings suggest that (educational) interventions about the global state of gender equality are much more likely to succeed than information treatments about overall inequality and that these interventions should target the privileged.

Monetary policy and the racial wage gap

This paper aims to clarify the relationship between monetary policy shocks and wage inequality. We emphasize the relevance of within- and between-wage-group inequalities in explaining total wage inequality in the USA. Relying on the quarterly data for the period 2000–2020, our analysis shows that racial disparities explain 12% of observed total wage inequality. Subsequently, we examine the role of monetary policy in wage inequality. We do not find compelling evidence that shows that monetary policy plays a role in exacerbating the racial wage gap. However, there is evidence that accommodative monetary policy plays a role in magnifying between-group wage inequalities but the impact occurs after 2008.

The persistence of wages

This paper documents the extent to which wage persistence can be explained by permanent worker, employer, and match heterogeneity. Standard methods used to perform such decompositions for industry or racial wage gaps are inappropriate for decomposing wage persistence in dynamic panel data models because of the incidental parameter problem. When we apply these methods without bias correction, we find that the majority, 59.3 percent, of wage persistence is explained by worker heterogeneity, with employer and match heterogeneity explaining 29.7 and 11.0 percent, respectively. We evaluate three methods for addressing incidental parameter bias using a Monte Carlo study. An empirical application to Portuguese linked employer–employee data shows that the uncorrected estimates tend to understate wage persistence by around 24 to 42 percent, depending on the choice of the bias correction estimator used, and overstate the extent to which wage persistence arises from permanent unobserved heterogeneity. Furthermore, results indicate that the uncorrected estimates overstate the role of permanent worker heterogeneity, and understate the role of firm heterogeneity.

Monetary Policy and the Racial Wage Gap

Monetary Policy and the Racial Wage Gap

Assortative Matching or Exclusionary Hiring? The Impact of Employment and Pay Policies on Racial Wage Differences in Brazil

We measure the effects of firm policies on racial pay differences in Brazil. Non-Whites are less likely to be hired by high-wage firms, explaining about 20 percent of the racial wage gap for both genders. Firm-specific pay premiums for non-Whites are also compressed relative to Whites, contributing another 5 percent for that gap. A counterfactual analysis reveals that about two-thirds of the underrepresentation of non-Whites at higher-wage firms is explained by race-neutral skill-based sorting. Non-skill-based sorting and differential wage setting are largest for college-educated workers, suggesting that the allocative costs of discriminatory hiring and pay policies may be relatively large in Brazil. (JEL J15, J24, J31, J41, J46, J71, O15)

Is there a racial gap in CEO compensation?

Racial gap in corporate leadership has prompted continuous and intense discussions, motivating research into the conditions minorities face after they reach top management positions. We contribute to the ongoing debate in this area by examining the association between CEO race and compensation. We do not find evidence for a significant racial wage gap at the CEO level across various econometric specifications, including total-sample OLS, firm-fixed effects to capture CEO transitions within firm, propensity score matched sample, and instrumental variable analysis. The insignificant results hold for total compensation, cash compensation, and non-cash compensation. Further, there is no consistent evidence of differences in CEO compensation for any of the major racial groups (Blacks, Hispanics, and Asians). Based on our results, we conclude that racial minorities who make it to the CEO position in Corporate America are compensated at similar levels to their Caucasian counterparts.

Is There a Racial Gap in CEO Compensation?

Racial gap in corporate leadership has prompted continuous and intense discussions, motivating research into the conditions minorities face after they reach top management positions. We contribute to the ongoing debate in this area by examining the association between CEO race and compensation. We do not find evidence for a significant racial wage gap at the CEO level across various econometric specifications, including total-sample OLS, firm-fixed effects to capture CEO transitions within firm, propensity score matched sample, and instrumental variable analysis. The insignificant results hold for total compensation, cash compensation, and non-cash compensation. Further, there is no consistent evidence of differences in CEO compensation for any of the major racial groups (Blacks, Hispanics, and Asians). Based on our results, we conclude that racial minorities who make it to the CEO position in Corporate America are compensated at similar levels to their Caucasian counterparts.

Barrier to Entry or Signal of Quality? The Effects of Occupational Licensing on Minority Dental Assistants

Economic theory suggests that occupational licensing can be a barrier to entry that restricts labor supply (Friedman, 1962; Stigler, 1971) or a signal of quality that enhances the labor market (Leland, 1979). This paper studies two types of licenses for dental assistants (DAs) in the U.S. to illustrate the competing supply-restricting and quality-signaling effects of licensing on minority workers. Specifically, I study the effects of introducing the X-ray permit, a state-issued license to perform X-ray procedures that also carries information about a DA’ s competence, against that of the entry-level license, which provides little information about a DA’ s competence. I find that the X-ray permit requirement reduces the wage gap between non-Hispanic white and minority DAs by 8 percent, presumably because it helps minority DAs secure jobs that entail X-ray procedures. In contrast, entry-level licensing does not reduce the racial wage gap. These findings suggest that licensing alleviates statistical discrimination if it reveals information about the holder’ s productivity.

Civil Rights Enforcement and the Racial Wage Gap

We present new evidence on three measures of civil rights enforcement--litigation, judge dismissal, and plaintiff win rates--across US district courts from 1979 to 2016. Across courts, higher shares of Republican judges are associated with higher dismissal rates regardless of court composition in terms of gender and race. Further, we find that states with higher litigation rates also exhibit higher racial wage gaps, whereas states with higher judge dismissal (plaintiff win) rates experience higher (lower) racial wage gaps. Our results highlight the importance of legal institutions on the persistence of racial inequality.

A Model of Occupational Licensing and Statistical Discrimination

We develop a model of statistical discrimination in occupational licensing with endogenous occupation selection and wage determination. We find a unique equilibrium with sharp comparative statics. Our key theoretical result is that the licensing premium is higher for workers who are members of demographic groups that face a higher cost of licensing. The predictions of the model can explain, for example, the empirical finding in the literature that occupational licenses that preclude felons close the racial wage gap among men by conferring a higher premium to Black men than to White men (Blair and Chung 2018).

Recent dynamics in racial wage gap in the United States

ABSTRACT Using weekly earnings data from Current Population Survey for Black and White Americans employed full time, we examine how disparities based on race stand relative to disparities between wage groups. We find that wage disparity between wage groups prevails significantly as compared to race wage gap on explaining overall wage inequality among Blacks and Whites in the United States.

Racial Gaps in the Labor Market: The Role of Nonwhite Entrepreneurship

We investigate how the racial composition of entrepreneurs affects racial differences in labor market outcomes of workers. We create a novel data set that identifies the race of firm owners in Brazil and link it with matched employer-employee data that contains information on the universe of formal employment contracts. We first present evidence of assortative matching between nonwhite workers and nonwhite entrepreneurs. Controlling for a wide set of covariates, we find that the share of nonwhite workers is 18.7% higher in firms with at least one nonwhite owner. We then show that the adjusted racial wage gap is 28% smaller in firms with nonwhite entrepreneurs than in white-owned firms. This is partially explained by nonwhite workers accessing better occupations in firms with nonwhite entrepreneurs. Lastly, we show that nonwhite workers are 15% more likely to become entrepreneurs if they were previously employed by nonwhite entrepreneurs than if they were employed by white entrepreneurs.