Labor Market Discrimination

Standard economic methods of testing for labor market discrimination regress wages on race and other correlated observables. However, these methods may severely underestimate the role of discrimination on minority welfare if racial prejudice also affects conditioning variables or labor market policies. To address these concerns, this project comprises two related analyses. First, we analyze the effect of racial prejudice on pre-market factors by constructing state-level estimates of Black-White gaps in labor force participation, hours worked and educational attainment. We then regress the residual race gaps on state-level GSS estimates of racial prejudice. Second, we analyze the role of racial prejudice in social and economic policies by regressing the generosity/progressivity of state-level social insurance benefits and eligibility (SNAP, TANF, Medicaid), minimum wage laws and income taxes on our racial prejudice measures