Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/36140
Authors: 
Bodvarsson, Örn B.
Humphreys, Brad R.
Year of Publication: 
2009
Series/Report no.: 
IZA Discussion Papers 4551
Abstract: 
We investigate the possibility that labor market discrimination affects economic outcomes in the complementary capital market. Previous research contains ample theoretical justification, and empirical evidence, that discrimination affects wages and employment in labor markets. However, the effects of discrimination against minority labor on transactions in markets for other inputs used in production are not known. We develop a model of the optimal capital stock put in place in the presence of customer discrimination and test this model using data on sports facility construction over the period 1950-2004. The empirical evidence suggests that teams in cities with more racial segregation spend less on sports facilities, confirming the predictions of the model about the effect of customer discrimination on capital investment.
Subjects: 
Racial discrimination
capital stock
complementarity
stadium financing
JEL: 
J15
Document Type: 
Working Paper

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