Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86745
Authors: 
Gautier, Pieter A.
Zenou, Yves
Year of Publication: 
2008
Series/Report no.: 
Tinbergen Institute Discussion Paper 08-106/3
Abstract: 
We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labor-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the initial wealth difference, blacks cannot afford cars while whites can. Car ownership allows whites to reach more jobs per unit of time and this gives them a better bargaining position. As a result, in equilibrium, blacks end up with both higher unemployment rates and lower wages than whites. Furthermore, it takes more time for blacks to reach their jobs even though they travel less miles. Those predictions are consistent with the data. Better access to capital markets or better public transportation will reduce the differences in labor market outcomes.
Subjects: 
Transportation
mismatch
job search
spatial labor markets
multiple job centers
ethnic minorities
JEL: 
D83
J15
J64
R1
Document Type: 
Working Paper

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