City Structure, Job Search and Labor Discrimination. Theory and Policy Implications
National Institute for Agricultural Research (INRA); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); The World Bank; Paris School of Economics (PSE)
Stockholm University; Research Institute of Industrial Economics (IUI); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)
CEPR Discussion Paper No. 5009
We consider a search-matching model in which black workers are discriminated against and the job arrival rates of all workers depend on social networks as well as distance to jobs. Location choices are mainly driven by the racial preferences of households. There are two possible urban equilibria and we show that, under some reasonable conditions, all workers are better off in the equilibrium where blacks are close to jobs. We then consider two policies: affirmative action and employment subsidies to the firms that hire black workers. We show that, in cities where black workers reside far away from jobs, the optimal policy is to impose higher quotas or employment subsidies than in cities where they live close to jobs.
Number of Pages in PDF File: 53
Keywords: Spatial mismatch, racial preferences, social networks, affirmative action, employment subsidies
JEL Classification: J15, J41, R14working papers series
Date posted: June 21, 2005
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo4 in 0.813 seconds