THE EMPLOYMENT EFFECTS OF WAGE DISCRIMINATION AGAINST BLACK-MEN

When labor supply curves are upward-sloping, wage discrimination again st black men reduces not only their relative wages, but also their rel ative employment rates. Using data from the 1984 Survey of Income and Program Participation, the authors estimate wage discrimination agains t black men and, for the first time, quantify the effects of that disc rimination on the employment of black and white men. They find that 62 % of the difference in offer wages to black and white men, and 67% of the difference in their observed wages, cannot be attributed to differ ences in productivity. Assuming that the unexplained wage differential is attributable entirely to employer discrimination, then the disince ntive effects of wage discrimination reduced the relative employment r ate of black men from 89% to 82% of white men's employment rate. Thus, wage discrimination and its employment effects resulted in a substant ial transfer of resources from blacks to whites in 1984.