Measuring the welfare costs of racial discrimination in the labor market

Almarina Gramozi, Theodore Palivos and Marios Zachariadis

Economic Inquiry, 2023, vol. 61, issue 2, 232-252

Abstract: We find that the conditional wage‐gap for non‐whites is negatively related to gross domestic product per worker across the US. To explain this, we develop a model linking unequal access to employment with the wage gap, labor misallocation, and income loss. The presence of underprivileged workers allows inefficient firms to co‐exist with efficient ones and leads to skill misallocation, higher unemployment and lower output. Calibrating the model to match the US, we find a fall in market‐based racial discrimination renders inefficient firms non‐profitable, causing reallocation of labor and a positive effect on income as high as 4 percent when discrimination is eliminated.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/ecin.13126

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ecinqu:v:61:y:2023:i:2:p:232-252

Ordering information: This journal article can be ordered from
https://ordering.onl ... s.aspx?ref=1465-7295

Access Statistics for this article

Economic Inquiry is currently edited by Tim Salmon

More articles in Economic Inquiry from Western Economic Association International Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().