The role of location in evaluating racial wage disparity
Abstract: A standard object of empirical analysis in labor economics is a modified Mincer wage function in which an individual's log wage is specified to be a function of education, experience, and an indicator variable identifying race. Researchers hope that estimates from this exercise can be informative about the impact of minority status on labor market success. Here we set out a theoretical justification for this regression in a context in which individuals live and work in different locations. Our model leads to the traditional approach, but with the important caveat that the regression should include location-specific fixed effects. Given this insight, we reevaluate evidence about the black-white wage disparity in the United States.
File(s): File format is application/pdf http://research.stlouisfed.org/wp/2009/2009-043.pdf
Provider: Federal Reserve Bank of St. Louis
Part of Series: Working Papers
Publication Date: 2009