The Measurement of Racial Discrimination in Pay between Job Categories: Theory and Test

Orn B. Bodvarsson and John G Sessions ()

No 3748, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: The traditional model of taste discrimination in labor markets presumes perfect substitution, making it unsuitable for the measurement of discrimination across job assignments. We extend the model to explain cross-assignment discrimination and test it on data from Major League Baseball. A competitive firm with a Generalized Leontief production function fills each job assignment with whites and nonwhites in an environment of customer prejudice. According to the model, cross-assignment discrimination depends upon racial productivity differences, the productivity x prejudice interaction, technology, relative labor supply and racial integration. We find strong evidence of ceteris paribus racial salary differences between hitters and pitchers.

Keywords: wages; discrimination; imperfect substitutability; integration (search for similar items in EconPapers)
JEL-codes: J7 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2008-10
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