Journal of Labor Research

, Volume 36, Issue 2, pp 232–248 | Cite as

Statistical Discrimination and the Implication of Employer-Employee Racial Matches

  • Yariv D. FadlonEmail author


In this paper, I test the empirical validity of a statistical discrimination model that incorporates employer’s race. I argue that if an employer statistically discriminates less against an employee that shares the same race (matched) than an employee who does not share the same race (mismatched), then the correlation between the employee’s wage and his skill level (AFQT) is stronger for a matched employee than for a mismatched employee. Using data from the NLSY97, which includes information about the racial background of employees and their supervisors, I find evidence that is consistent with a statistical discrimination model for young male employees.


Statistical discrimination Employer-Employee data NLSY97 Wage differentials J31 


  1. Altonji JG, Pierret CR (2001) Employer learning and statistical discrimination. Q J Econ 116(1):313–350CrossRefGoogle Scholar
  2. Arcidiacono P, Bayer P, Hizmo A (2010) Beyond signaling and human capital: education and the revelation of ability. Am Econ J Appl Econ 2(4):76–104CrossRefGoogle Scholar
  3. Arrow K (1973) The theory of discrimination. Discrimination in Labor Markets 3(10)Google Scholar
  4. Calvo-Armengol A, Jackson MO (2004) The effects of social networks on employment and inequality. Am Econ Rev 94(3):426–454CrossRefGoogle Scholar
  5. Calvó-Armengol A, Jackson MO (2007) Networks in labor markets: wage and employment dynamics and inequality. J Econ Theory 132(1):27–46CrossRefGoogle Scholar
  6. Cooper-Patrick L, Gallo JJ, Gonzales JJ, Vu HT, Powe NR, Nelson C, Ford DE (1999) Race, gender, and partnership in the patient-physician relationship. JAMA: J Am Med Assoc 282(6):583–589CrossRefGoogle Scholar
  7. Cornell B, Welch I (1996) Culture, information, and screening discrimination. J Polit Econ 104(3):542–571CrossRefGoogle Scholar
  8. Dickinson DL, Oaxaca RL (2009) Statistical discrimination in labor markets: an experimental analysis. South Econ J 76(1):16–31CrossRefGoogle Scholar
  9. Dustmann C, Pereira SC (2008) Wage growth and job mobility in the united kingdom and germany. Ind Labor Relat Rev 61(3):374–393Google Scholar
  10. Farber HS, Gibbons R (1996) Learning and wage dynamics. Q J Econ 111 (4):1007–1047CrossRefGoogle Scholar
  11. Giuliano L, Levine DI, Leonard J (2009) Manager race and the race of new hires. J Labor Econ 27(4):589–631CrossRefGoogle Scholar
  12. Hecht ML, Jackson RL, Ribeau SA (2003) African American communication: exploring identity and culture. Routledge, EvanstonGoogle Scholar
  13. Heckman JJ, Rubinstein Y (2001) The importance of noncognitive skills: lessons from the ged testing program. Am Econ Rev 91(2):145–149CrossRefGoogle Scholar
  14. Kahn LB (2013) Asymmetric information between employers. Am Econ J Appl Econ 5(4):165–205CrossRefGoogle Scholar
  15. Lang K (1986) A language theory of discrimination. Q J Econ 101(2):363–382CrossRefGoogle Scholar
  16. McPherson M, Smith-Lovin L, Cook JM (2001) Birds of a feather: homophily in social networks. Annu Rev Sociol 27:415–444CrossRefGoogle Scholar
  17. Neal DA, Johnson WR (1996) The role of premarket factors in black-white wage differences. J Polit Econ 104(5):869–895CrossRefGoogle Scholar
  18. Oettinger GS (1996) Statistical discrimination and the early career evolution of the black-white wage gap. J Labor Econ 14(1):52–78CrossRefGoogle Scholar
  19. Phelps ES (1972) The statistical theory of racism and sexism. Am Econ Rev 62(4):659–661Google Scholar
  20. Pinkston JC (2005) Test of screening discrimination with employer learning. A Indus & Lab Rel Rev 59:267Google Scholar
  21. Pinkston JC (2006) A test of screening discrimination with employer learning. Ind Labor Relat Rev 59(2):267–284Google Scholar
  22. Schonberg U (2007) Testing for asymmetric employer learning. J Labor Econ 25(4):651–691CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.Department of EconomicsClaremont Graduate UniversityClaremontUSA

Personalised recommendations