Male interracial wage differentials: competing explanations

Persistent interracial wage differentials present a challenge for neoclassi cal models of discrimination, which claim that long-run competition is not consistent with persistent discrimination. This study provides an empirical examination of the missing variable and job competition models of interrac ial wage inequality. The results argue strongly against the missing variabl es approach and strongly in favour of the job competition model. Specifical ly, this study finds that about one-half of the male African American-white and Latino-white interracial wage differentials are due to market discrimi nation against African Americans and Latinos. In addition, the positive and significant coefficients on the race-gender employment-density variables s trongly affirm the job competition model's contention that access to white (especially) male-dominated jobs increases an individual's wage rate-regard less of race. Racial job segregation, then, is an important explanatory var iable for racial wage discrimination.