A supply and demand model of co-worker, employer and customer discrimination

When racial wage differentials reflect customer, co-worker and employer dis crimination, how can these sources of discrimination be theoretically and e mpirically distinguished? We develop a wage model fashioned around professi onal basketball that includes customer, employer and co-worker discriminati on when there is racial integration, We find that the model is capable of: (1) predicting unexpected effects of the various types of discrimination on wages; (2) the three types of discrimination will interact nonlinearly; an d (3) compensation attributable to co-worker prejudice is endogenous. Using data from the National Basketball Association, we find evidence consistent with co-worker discrimination by white players and customer discrimination by nonwhite fans. (C) 2001 Elsevier Science B.V. All rights reserved.