Wage Discrimination Over the Business Cycle

Biddle, Jeff; Hamermesh, Daniel S.

doi:10.2139/ssrn.2039571

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Wage Discrimination Over the Business Cycle

IZA Discussion Paper No. 6445

33 Pages Posted: 14 Apr 2012

See all articles by Jeff Biddle

Daniel S. Hamermesh

University of Texas at Austin - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Abstract

Using CPS data from 1979-2009 we examine how cyclical downturns and industry-specific demand shocks affect wage differentials between white non-Hispanic men and women, Hispanics and non-Hispanic whites, and African-Americans and non-Hispanic whites. Women's relative earnings are harmed by negative shocks; the wage disadvantage of African-Americans drops with negative shocks, which have slight negative effects on Hispanics' relative wages. Negative shocks also increase the earnings disadvantage of bad-looking workers. A theory of job search suggests two opposite-signed mechanisms that affect these wage differentials. It suggests greater absolute effects among job-movers, which is verified using the longitudinal component of the CPS.

Keywords: gender, race, ethnicity

JEL Classification: E29, J71

Suggested Citation: Suggested Citation

Biddle, Jeff E. and Hamermesh, Daniel S., Wage Discrimination Over the Business Cycle. IZA Discussion Paper No. 6445, Available at SSRN: https://ssrn.com/abstract=2039571 or http://dx.doi.org/10.2139/ssrn.2039571