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On the labor market effects of salience of ethnic/racial disputes

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  • K. Kıvanç Aköz
  • K. Peren Arın
  • Christina Zenker

Abstract

An increase in the salience of ethnic/racial (E/R) disputes often signifies a shift in the E/R status quo of a society. We present a labor market model where matching frictions are higher for the E/R minority due to labor market discrimination and the unemployment insurance benefits are determined via competitive elections. We hypothesize that a reduction in labor market discrimination, possibly because of its salience, shifts the unemployment from the minority to the majority, leading to a drop in the unemployment rate among the black minority, and consequently the unemployment insurance they receive. Nevertheless, the total unemployment insurance benefit may increase because the median voter, who is a member of the majority, prefers a higher level of unemployment insurance. To empirically test our hypothesis, we constructed a novel, news‐based, and time‐varying measure of E/R discrimination salience for the US and show that unemployment insurance benefits to the black minority decreases in response to an increase in our measure.

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  • K. Kıvanç Aköz & K. Peren Arın & Christina Zenker, 2022. "On the labor market effects of salience of ethnic/racial disputes," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(2), pages 348-361, April.
    • Handle: RePEc:bla:jpbect:v:24:y:2022:i:2:p:348-361
    DOI: 10.1111/jpet.12557
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    Cited by:

    1. Gergely Horváth & Rui Zhang, 2022. "Ethnic entrepreneurship, assimilation, and integration policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(4), pages 781-816, August.

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