Wages, Sorting on Skill, and the Racial Composition of Jobs

Abstract

Wages for black and white workers are substantially lower in occupations with a high densityof black employees, following standard controls. Such correlations can exist absentdiscrimination or as a result of discrimination. In wage level equations, the magnitude of thecorrelation falls sharply after controlling for occupational skills. Longitudinal estimatesaccounting for worker heterogeneity indicate little if any wage change associated withchanges in racial composition. Results support a “quality sorting” explanation, with racialdensity serving as an index of unmeasured skills. Although past discrimination helpsdetermine the present pattern of job sorting, current discrimination cannot explain therelationship between wages and racial density. Current discrimination reflected in racial wagegaps occurs within occupations or across occupations in a manner uncorrelated with racialcomposition.

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