The Measurement of Racial Discrimination in Pay between Job Categories: Theory and Test

22 Pages Posted: 13 Oct 2008

See all articles by Orn B. Bodvarsson

Orn B. Bodvarsson

Saint Cloud State University; IZA Institute of Labor Economics

John G. Sessions

University of Bath; IZA Institute of Labor Economics

Abstract

The traditional model of taste discrimination in labor markets presumes perfect substitution, making it unsuitable for the measurement of discrimination across job assignments. We extend the model to explain cross-assignment discrimination and test it on data from Major League Baseball. A competitive firm with a Generalized Leontief production function fills each job assignment with whites and nonwhites in an environment of customer prejudice. According to the model, cross-assignment discrimination depends upon racial productivity differences, the productivity x prejudice interaction, technology, relative labor supply and racial integration. We find strong evidence of ceteris paribus racial salary differences between hitters and pitchers.

Keywords: wages, discrimination, imperfect substitutability, integration

JEL Classification: J7

Suggested Citation

Bodvarsson, Orn B. and Sessions, John G., The Measurement of Racial Discrimination in Pay between Job Categories: Theory and Test. IZA Discussion Paper No. 3748, Available at SSRN: https://ssrn.com/abstract=1282970 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Orn B. Bodvarsson (Contact Author)

Saint Cloud State University ( email )

Saint Cloud, MN 56301
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

John G. Sessions

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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