published in: Journal of Labor Economics, 2004, 22 (1), 189-210
Wages for black and white workers are substantially lower in occupations with a high density
of black employees, following standard controls. Such correlations can exist absent
discrimination or as a result of discrimination. In wage level equations, the magnitude of the
correlation falls sharply after controlling for occupational skills. Longitudinal estimates
accounting for worker heterogeneity indicate little if any wage change associated with
changes in racial composition. Results support a “quality sorting” explanation, with racial
density serving as an index of unmeasured skills. Although past discrimination helps
determine the present pattern of job sorting, current discrimination cannot explain the
relationship between wages and racial density. Current discrimination reflected in racial wage
gaps occurs within occupations or across occupations in a manner uncorrelated with racial
composition.
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