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Male Interracial Wage Differentials: Competing Explanations, Patrick Leon Mason

Patrick L. Mason

Persistent interracial wage differentials present a challenge for neoclassical models of discrimination, which claim that long run competition is not consistent with persistent discrimination. Accordingly, several missing variable explanations are proposed in the literature. These modifications have two implications. One, interracial wage inequality is due to interracial inequality in pre-labor market factors. Two, there is no correlation between intergroup segregation and interracial wage differentials. However, the job competition model of discrimination argues that persistent wage discrimination and racial and gender employment segregation are causally related. Also, this model shows that racial discrimination is linked to the profit maximizing behavior of …