Wages, Sorting on Skill, and the Racial Composition of Jobs

23 Pages Posted: 8 Apr 2003

See all articles by Barry T. Hirsch

Barry T. Hirsch

IZA Institute of Labor Economics; Georgia State University

David A. MacPherson

Trinity University; IZA Institute of Labor Economics

Date Written: March 2003

Abstract

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.

Keywords: Discrimination, Racial Composition, Skill Sorting

JEL Classification: J3, J7

Suggested Citation

Hirsch, Barry T. and Hirsch, Barry T. and MacPherson, David A., Wages, Sorting on Skill, and the Racial Composition of Jobs (March 2003). Available at SSRN: https://ssrn.com/abstract=283202 or http://dx.doi.org/10.2139/ssrn.283202

Barry T. Hirsch (Contact Author)

IZA Institute of Labor Economics

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

Georgia State University ( email )

Department of Economics
Andrew Young School of Policy Studies
Atlanta, GA 30302-3992
United States
404-413-0880 (Phone)
404-413-0145 (Fax)

HOME PAGE: http://unionstats.gsu.edu/bhirsch

David A. MacPherson

Trinity University ( email )

San Antonio, TX 78212
United States
210-999-8112 (Phone)
210-999-7255 (Fax)

HOME PAGE: http://www.davemacpherson.com

IZA Institute of Labor Economics

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

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