Volume 13, Number 2 (Spring) 1978
Flanagan, Robert J. 1978. "Discrimination Theory, Labor Turnover, and Racial Unemployment Differentials." Journal of Human Resources 13(2):187-207.
This paper examines theoretically and empirically the feedback from racial wage differences to unemployment differentials among experienced workers. Although the received theory predicts that the removal of racial wage differentials will increase the relative unemployment of blacks, this conclusion rests on a demand-oriented analysis of discrimination which omits the effect of market discrimination on racial differences in quit behavior, movements between market and nonmarket activity, and related unemployment. The empirical work in the paper analyzes turnover flows and the probability of incurring unemployment, conditional on turnover by race. In clarifying the role of racial wage differentials on supply behavior, the results challenge the traditional interpretation of the effect of wage discrimination.
The author is Associate Professor of Labor Economics, Graduate School of Business, Stanford University. This paper was prepared under Grant No. 91-17-72-32 from the Manpower Administration, U.S. Department of Labor, but points of view expressed do not necessarily represent the official position or policy of the Department of Labor. The author is grateful to Melvin Reder, Ronald Ehrenberg, Daniel Hammermesh, James Heckman, Lloyd Ulman, and members of the University of Chicago Labor Workshop for comments on earlier drafts, and to Michael Murphy and William Kowalewski for programming assistance.
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