Full Citation
Title: An Empirical Analysis Of Black-White Employment Differences Over The Business Cycles
Citation Type: Miscellaneous
Publication Year: 2006
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Abstract: Previous research on the US labor market has shown that unemployment rates of blacks have not only been substantially higher than that of whites over the last four decades, but also these differences have been amplified during recessions. However, the extent to which these differences reflect unobserved skill and productivity or other factors such as discrimination remains a matter of some debate. We propose the use of wages earned in the previous year as a measure of a worker's skill and productivity. Using the Current Population Survey March Supplement and the National Longitudinal Survey of Youth, in each year from 1976 to 2003, we compare the employment outcomes of black and white workers who earned the same wage in the previous year. After adjusting for worker skill and productivity in this way, we find that the unexplained gap in unemployment between blacks and white falls slightly, consistent with the view that some of the difference arises from unmeasured skill and productivity difference between the races. Nevertheless, the gap remains large and significant, and the pattern of larger gaps during recessions is unaffected. Consistent with previous work, we find that these differences do not exist for individuals in the highest part of the skill distribution. Our results improve upon the existing literature on the sources of black-white differences in employment outcomes by mitigating the problems related to unobserved individual productivity and skills. Under general assumptions about labor supply changes over the business cycle, supported by behavior of reported reservation wages of black and white youth, these results may indicate discrimination against blacks.
Url: https://sites.google.com/site/isaacmbiti/black_white_paper.pdf
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Authors: Baskaya, Yusuf, S; Mbiti, Isaac, M
Publisher: Brown University
Data Collections: IPUMS CPS
Topics: Labor Force and Occupational Structure, Race and Ethnicity
Countries: United States