Racial Discrimination in the Labor Market: Theory and Empirics

Kevin Lang and Jee-Yeon Lehmann ()

No 17450, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We review theories of race discrimination in the labor market. Taste-based models can generate wage and unemployment duration differentials when combined with either random or directed search even when strong prejudice is not widespread, but no existing model explains the unemployment rate differential. Models of statistical discrimination based on differential observability of productivity across races can explain the pattern and magnitudes of wage differentials but do not address employment and unemployment. At their current state of development, models of statistical discrimination based on rational stereotypes have little empirical content. It is plausible that models combining elements of the search models with statistical discrimination could fit the data. We suggest possible avenues to be pursued and comment briefly on the implication of existing theory for public policy.

JEL-codes: J31 J64 J71 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-lab and nep-lma
Note: LS
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Citations: View citations in EconPapers (21)

Published as Kevin Lang & Jee-Yeon K. Lehmann, 2012. "Racial Discrimination in the Labor Market: Theory and Empirics," Journal of Economic Literature, American Economic Association, vol. 50(4), pages 959-1006, December.

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Related works:
Journal Article: Racial Discrimination in the Labor Market: Theory and Empirics (2012)
Working Paper: RACIAL DISCRIMINATION IN THE LABOR MARKET: THEORY AND EMPIRICS (2011)
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