 A search model with endogenous job destruction and discrimination: Why equal wage policies may not eliminate wage disparityJonathan A. Lanning Labour Economics, 2014, vol. 26, issue C, 55-71 Abstract: This paper extends the search with discrimination framework by introducing jobs that are constrained by equal wage policies, and endogenous job destruction that creates Becker-like competitive pressure on prejudiced firms. The model predicts a number of stylized facts observed in the U.S. labor market, including persistent aggregate wage inequality, prevalent within-firm wage equality, overlapping wage distributions for different worker types, and some, but imperfect, job sorting/segregation. Numeric simulations are offered to illustrate some of the model's predictions. These include a counterintuitive relationship between wage inequality and equal wage policies that can arise in special cases: under specific assumptions equal wage policies can actually increase the steady-state level of market discrimination. I discuss this result's implication that different policies may be optimal to combat discrimination based on race versus discrimination based on gender, though this finding may be of limited practical importance. Keywords: Labor discrimination; Antidiscrimination policy; Search; Wage differentials (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:26:y:2014:i:c:p:55-71 DOI: 10.1016/j.labeco.2013.11.001 Access Statistics for this article Labour Economics is currently edited by A. Ichino More articles in Labour Economics from Elsevier |
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