Wage Effects of Transracialism

In today’s illustration of Cowen’s second law, here is a paper on what happens to wages when a worker’s subjectively reported race changes:

In Brazil, different employers often report different racial classifications for the same worker. We use this variation in employer-reported race to identify wage discrimination. Workers whose reported race changes from non-white to white receive a wage increase; those who change from white to non-white realize a symmetric wage decrease. As much as 40 percent of the raw racial wage gap is explained by the employer’s report of race, after controlling for all individual characteristics that do not change across jobs. The results are consistent with workers manipulating perceived race in an environment where racial classification is subjective, but discrimination persists.

Hat tip: Scott Cunningham.