Car Ownership and the Labour Market of Ethnic Minorities

Yves Zenou and Pieter Gautier

No 7061, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labour-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the initial wealth difference, blacks cannot afford cars while whites can. Car ownership allows whites to reach more jobs per unit of time and this gives them a better bargaining position. As a result, in equilibrium, blacks end up with both higher unemployment rates and lower wages than whites. Furthermore, it takes more time for blacks to reach their jobs even though they travel less miles. Those predictions are consistent with the data. Better access to capital markets or better public transportation will reduce the differences in labour market outcomes.

Keywords: Ethnic minorities; Job search; Multiple job centres; Spatial labour markets; Transportation mismatch (search for similar items in EconPapers)
JEL-codes: D83 J15 J64 R1 (search for similar items in EconPapers)
Date: 2008-11
New Economics Papers: this item is included in nep-geo, nep-lab and nep-ure
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Related works:
Journal Article: Car ownership and the labor market of ethnic minorities (2010)
Working Paper: Car Ownership and the Labor Market of Ethnic Minorities (2008)
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