Prejudice and the Economics of Discrimination

47 Pages Posted: 19 Dec 2007 Last revised: 7 Feb 2008

See all articles by Kerwin Kofi Charles

Kerwin Kofi Charles

University of Chicago - Harris School of Public Policy

Jonathan Guryan

Northwestern University - Human Development and Social Policy (HDSP) Program; National Bureau of Economic Research (NBER)

Date Written: December 2007

Abstract

This paper tests the predictions about the relationship between racial prejudice and racial wage gaps from Becker's (1957) seminal work on employer discrimination - something which has not previously been done in the large economics discrimination literature. Using rich data on racial prejudice from the General Social Survey, we find strong support for all of the key predictions from Becker about the relationship between prejudice and racial wage gaps. In particular, we show that, relative to white wages, black wages: (a) vary negatively with a measure of the prejudice of the "marginal" white in a state; (b) vary negatively with the prejudice in the lower tail of the prejudice distribution, but are unaffected by the prejudice of the most prejudiced persons in a state; and (c) vary negatively with the fraction of a state that is black. We show that these results are robust to a variety of extensions, including directly controlling for racial skill quality differences and instrumental variables estimates. We present some initial evidence to show that racial wage gaps are larger the more racially integrated is a state's workforce, also as Becker's model predicts. The paper also briefly discusses familiar criticisms and extensions of the standard Becker model, including an argument of our own which, like some recent work, shows that the model's main predictions can be shown theoretically to survive the effects of long run competition.

Suggested Citation

Charles, Kerwin Kofi and Guryan, Jonathan, Prejudice and the Economics of Discrimination (December 2007). NBER Working Paper No. w13661, Available at SSRN: https://ssrn.com/abstract=1073644

Kerwin Kofi Charles

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States
(773) 834-8922 (Phone)

Jonathan Guryan (Contact Author)

Northwestern University - Human Development and Social Policy (HDSP) Program ( email )

2046 Sheridan Road
Evanston, IL 60208
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
61
Abstract Views
1,030
rank
382,007
PlumX Metrics