Prejudice and Racial Matches in Employment

Timothy Bond and Jee-Yeon K. Lehmann

MPRA Paper from University Library of Munich, Germany

Abstract: We develop a search model in which some employers hold unobservable racial prejudice towards black workers. Prejudiced employers may refuse to hire and may terminate black workers based on their prejudice. Workers do not observe employer prejudice, but they observe the race of their potential supervisor at the firm, which serves as a signal of the employer's prejudice. Jobs in firms with black supervisors hold higher option value for black workers, because they are less likely to face prejudice-based termination. Hence, black workers are willing to accept employment with lower expected match quality from firms with black supervisors. We derive theoretical predictions on differences in observed wages and job stability across supervisor race and prejudice levels. We find empirical support for our predictions using a unique longitudinal dataset with information on the worker's supervisor race matched with state-level measures of prejudice.

Keywords: prejudice; discrimination; supervisor race (search for similar items in EconPapers)
JEL-codes: J64 J7 J71 (search for similar items in EconPapers)
Date: 2015-10-28
New Economics Papers: this item is included in nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/67494/1/MPRA_paper_67494.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/73430/1/MPRA_paper_73430.pdf revised version (application/pdf)

Related works:
Journal Article: Prejudice and racial matches in employment (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:67494

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