The role of location in evaluating racial wage disparity

Dan Black (), Natalia A. Kolesnikova, Seth G. Sanders and Lowell J. Taylor

No 2009-043, Working Papers from Federal Reserve Bank of St. Louis

Abstract: A standard object of empirical analysis in labor economics is a modified Mincer wage function in which an individual's log wage is specified to be a function of education, experience, and an indicator variable identifying race. Researchers hope that estimates from this exercise can be informative about the impact of minority status on labor market success. Here we set out a theoretical justification for this regression in a context in which individuals live and work in different locations. Our model leads to the traditional approach, but with the important caveat that the regression should include location-specific fixed effects. Given this insight, we reevaluate evidence about the black-white wage disparity in the United States.

Keywords: Income distribution; Wages; Discrimination in employment (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab, nep-pke and nep-ure
Date: 2009

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