Wages, Sorting on Skill, and the Racial Composition of Jobs
Barry T. Hirsch
Georgia State University; Institute for the Study of Labor (IZA)
David A. MacPherson
Trinity University; Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 741
Wages for black and white workers are substantially lower in occupations with a high density of black employees, following standard controls. Such correlations can exist absent discrimination or as a result of discrimination. In wage level equations, the magnitude of the correlation falls sharply after controlling for occupational skills. Longitudinal estimates accounting for worker heterogeneity indicate little if any wage change associated with changes in racial composition. Results support a "quality sorting" explanation, with racial density serving as an index of unmeasured skills. Although past discrimination helps determine the present pattern of job sorting, current discrimination cannot explain the relationship between wages and racial density. Current discrimination reflected in racial wage gaps occurs within occupations or across occupations in a manner uncorrelated with racial composition.
Number of Pages in PDF File: 23
Keywords: Discrimination, Racial Composition, Skill Sorting
JEL Classification: J3, J7working papers series
Date posted: April 8, 2003
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