The latest evidence on racial discrimination and wages

by on December 27, 2007 at 7:35 am in Data Source | Permalink

I haven’t read through this closely, but it seems to be a very important paper:

…we show that, relative to white wages, black wages: (a) vary negatively
with a measure of the prejudice of the "marginal" white in a state; (b)
vary negatively with the prejudice in the lower tail of the prejudice
distribution, but are unaffected by the prejudice of the most
prejudiced persons in a state; and (c) vary negatively with the
fraction of a state that is black. We show that these results are
robust to a variety of extensions, including directly controlling for
racial skill quality differences and instrumental variables estimates.
We present some initial evidence to show that racial wage gaps are
larger the more racially integrated is a state’s workforce, also as
Becker’s model predicts.

Here is the paperThis version is $5 cheaper.

Mason December 27, 2007 at 10:47 am

“Here is the paper. This version is $5 cheaper.”

Cheaper? I got the entire paper (unless it’s more than 47 pages) off the first link for free.

It’s very dry and semi-interesting, I’d like to see Caplan’s take (I took labor relations with him)

Here is a summary if you want to save some time. (I didn’t read the entire thing)

The study was done to tests Becker’s prejudice model which states that the wages of the discriminated group will be set by the least prejudice employers and that because of this discrimination cannot last in the long run for a competitive market.

They found that that black wages are set by the least prejudice employers. They also found that as the black percentage of the population increased so did the effect of discrimination. This supports Becker’s model.

They list some areas of weakness, one being non measurable/observable skill differences, another being school quality (not quantity) differences. They say these might be seen by controlling for black-white test score gaps.

Not controlling for standardized test scores seems like a very basic thing to miss in such a study.

Jason Malloy December 27, 2007 at 12:25 pm

Not controlling for standardized test scores seems like a very basic thing to miss in such a study.

Oh thanks, Mason. They didn’t take this into account. Yep, this study appears worthless. When you match by IQ the wage gap disappears.

Billare December 27, 2007 at 12:43 pm

So sayeth Yomtov, sanctimonious liberal of the day.

joan December 27, 2007 at 1:30 pm

“controlling for skill differences already closes 96% of the B-W wage gap”
If this is the case, then the regional and state differences in the relative wage implies differences in the educational opportunities offered by states to black students vs white students. That is that states showing a higher level of prejudice have a black population with lower skill levels relative to the non-black population in the state.

G December 27, 2007 at 3:14 pm

If prejudice is commonplace in society, it will be commonplace in government as well. Allowing government to enact racist policies in any form is a huge mistake for this reason, IMO. Markets cannot correct for a flawed culture, at least not overnight.

Anyway, most of the prejudice against blacks in America that I’ve seen is cultural. Many blacks have a different culture and a different accent than whites. Humans are naturally drawn to people they have things in common with, and I don’t think markets, governments, or anything else is going to remove this tendency any time soon.

People just tend to want to hang out with others like them, but that doesn’t make them evil racists for doing so.

Steve Sailer December 28, 2007 at 12:59 am

Just as the black-white IQ gap tends to be smaller in the South than in the fairly liberal North-Central, the black-white imprisonment ratio gap is smaller in the South, and highest in liberal areas like Washington DC (where blacks are imprisoned at a rate 56 times higher than whites).

The next biggest gap was 31 to 1 in Minnesota, which has normally been quite a bit more liberal than the typical heartland state.

Overall, the two regions with the biggest racial differences in black-white imprisonment rates are the Old Northwest and the Mid-Atlantic.

The black-white ratio in imprisonment rates in the South runs at only about 6 to 1, below the national average.

States with relatively high black vs. white imprisonment rates tended to vote for Kerry—the correlation was a strong r = 0.62

Obviously, the discrimination explanation for the racial gap in imprisonment does not hold water.

ben g December 28, 2007 at 3:14 am

J Malloy:

Discrimination lowers IQ by preventing access to cognitively enhancing environments, so controlling for IQ controls a great deal for discrimination.

Andrew December 28, 2007 at 11:18 am

“racial wage gaps are larger the more racially integrated is a state’s workforce”

So, to accept this while thinking racism is the cause of wage gaps, one would have to believe that racists readily hire those oppressed minorities, they just pay them less due to their racism. Possible, but I think unlikely.

I wish that in public we could have a real discussion of what really constitutes racism. Economists come closest to having such a discussion.

It seems I feel the way about discrimination the way Bernard feels about liberty being lacking in the US.

I also imagine that from the perspective an an insular minority, it would be easy to draw the conclusion that others must be getting all these benefits. But from a lone white individual, I sure don’t feel like I’m getting help from anyone. In fact, with the soft affirmative action of diversity programs, I’d have to conclude the opposite.

By the way, at the place I used to work, I never heard talk of any racial tensions until they instituted their aggressive diversity programs and rhetoric. I think one problme with this rhetoric is it emphasizes a false competition for falsely scarcified resources; accolades, promotions, etc. And real competition for really scarce resources (raises, bonuses, etc.) based on group identity and bureaucracy rather than race-blind individual merit.

Andrew Edwards December 28, 2007 at 11:56 pm

Couple thoughts:

The statement: If prejudice is commonplace in society, it will be commonplace in government as well.

Carries a lot of weight in G’s argument without any evidence. Are governments really that congruent with the governed? Just asking.

Surely, if discrimination has power, its power does not mysteriously stop once IQ is formed.

Can we think of any models wherein this does not hold? For example that professional employers are less racist than schoolteachers? Or at least face different incentives? This is a great libertarian argument – publicly-employed teachers could be more insulated than employers from the costs of tacit discrimination.

Humans are naturally drawn to people they have things in common with, and I don’t think markets, governments, or anything else is going to remove this tendency any time soon.

What if you put people of different races in the same place? It may not take them that long to realize that they are 98% the same and that “accent” isn’t a useful way to measure a man. Especially if they’re children. Desegregating public schools would in that case be an example of a government action that, while not any sort of silver bullet, may help.

By that, I mean that a very small, subconcious amount of racism at the margin can have a big effect on an individual.

Andrew’s argument (different Andrew) sounds very right to me.

深圳翻译公司 February 21, 2008 at 9:34 am
花蓮租車資訊 August 8, 2009 at 1:45 am

Comments on this entry are closed.

Previous post:

Next post: