[Journal:] IZA Journal of Labor Policy [ISSN:] 2193-9004 [Publisher:] Springer [Place:] Heidelberg [Volume:] 2 [Year:] 2013 [Pages:] 1-20
Using CPS data from 1979-2009 we examine how cyclical downturns and industry-specific demand shocks affect wage differentials between white non-Hispanic men and women, Hispanics and non-Hispanic whites, and African-Americans and non-Hispanic whites. Women's relative earnings are harmed by negative shocks; the wage disadvantage of African-Americans drops with negative shocks, while the impact on Hispanics' wages is unclear. A theory of job search suggests two opposite-signed mechanisms that affect these wage differentials. It suggests greater absolute effects among job-movers, which is verified using the longitudinal component of the CPS.