Wrong Origin or Wrong Neighborhood: Explaining Lower Labor Market Performance of French Individuals of African Origin

Roland Rathelot

No 2009-04, Working Papers from Center for Research in Economics and Statistics

Abstract: In this study, I estimate models with cluster xed e ects, in order to disentangle the ef-fects of neighborhoods of residence from the ones of parents' nationalities on the probabilityfor a French individual to be employed and on his wages. I take advantage of the samplingstructure of the LFS to purge cluster e ects, using a conditional logit model for employmentand panel OLS for wages. The employment probability gap and the wage gap between Frenchworkers with French-born parents and French workers with parents of African origin may bedecomposed into three components: one due to a gap in observables, one due to a gap inneighborhood quality, and one unexplained component. It is found that the neighborhoodquality accounts for around one quarter of the employment di erential, while the unexplainedpart covers the rest. Wage di erentials are mainly explained by di erences in average in-dividual charecteristics. When cluster e ects are introduced in the model, di erences inneighborhood quality accounts for around one quarter of the wage gap.

Pages: 23
Date: 2009
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