'Can't Get Enough': Prejudice, Contact Jobs and the Racial Wage Gap in the US

Morgane Laouenan

No 8006, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The wage gap between African-Americans and white Americans is substantial in the US and has slightly narrowed over the past 30 years. Today, blacks have almost achieved the same educational level as whites. There is reason to believe that discrimination driven by prejudice plays a part in explaining this residual wage gap. Whereas racial prejudice has substantially declined over the past 30 years, the wage differential has slightly converged overtime. This 'prejudice puzzle' raises other reasons in explaining the absence of convergence of this racial differential. In this paper, I assess the impact which of the boom of jobs in contact with customers has on blacks' labor market earnings. I develop a search-matching model with bargaining to predict the negative impact which of the share of these contact jobs has on blacks' earnings in the presence of customer discrimination. I test this model using the IPUMS, the General Social Survey and the Occupation Information Network. My estimates show that black men's relative earnings are lower in areas where the proportions of prejudiced individuals and of contact jobs are high. I also estimate that the decreased exposure to racial prejudice is associated with a higher convergence of the residual gap, whereas the expansion of contact jobs partly explains the persistence of the gap.

Keywords: wage differential; racial prejudice; search model (search for similar items in EconPapers)
JEL-codes: J15 J61 R23 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2014-02
New Economics Papers: this item is included in nep-lab and nep-ure
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