City Structure, Job Search and Labor Discrimination. Theory and Policy Implications

53 Pages Posted: 21 Jun 2005

See all articles by Harris Selod

Harris Selod

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); World Bank - Development Research Group (DECRG)

Yves Zenou

Monash University - Department of Economics; Research Institute of Industrial Economics (IUI); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR); Stockholm University

Date Written: April 2005

Abstract

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.

Keywords: Spatial mismatch, racial preferences, social networks, affirmative action, employment subsidies

JEL Classification: J15, J41, R14

Suggested Citation

Selod, Harris and Zenou, Yves, City Structure, Job Search and Labor Discrimination. Theory and Policy Implications (April 2005). CEPR Discussion Paper No. 5009, Available at SSRN: https://ssrn.com/abstract=747465

Harris Selod

National Institute for Agricultural Research (INRA) ( email )

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National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

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World Bank - Development Research Group (DECRG)

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Yves Zenou (Contact Author)

Monash University - Department of Economics ( email )

Australia

Research Institute of Industrial Economics (IUI) ( email )

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Sweden

IZA Institute of Labor Economics

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Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR)

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United Kingdom

Stockholm University ( email )

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Stockholm, Stockholm SE-106 91
Sweden

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