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

Francois Gerard, Lorenzo Lagos, Edson Severnini and David Card

American Economic Review, 2021, vol. 111, issue 10, 3418-57

Abstract: 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-codes: J15 J24 J31 J41 J46 J71 O15 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (35)

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DOI: 10.1257/aer.20181596

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