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City Structure, Job Search and Labour Discrimination. Theory and Policy Implications

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  • Zenou, Yves
  • Selod, Harris

Abstract

We consider a search-matching model in which black workers are discriminated against and the job arrival rates of all workers depend on social networks as well as distance to jobs. Location choices are mainly driven by the racial preferences of households. There are two possible urban equilibrium and we show that, under some reasonable conditions, all workers are better off in the equilibrium where blacks are close to jobs. We then consider two policies: affirmative action and employment subsidies to the firms that hire black workers. We show that, in cities where black workers reside far away from jobs, the optimal policy is to impose higher quotas or employment subsidies than in cities where they live close to jobs.

Suggested Citation

  • Zenou, Yves & Selod, Harris, 2005. "City Structure, Job Search and Labour Discrimination. Theory and Policy Implications," CEPR Discussion Papers 4926, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4926
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    More about this item

    Keywords

    Spatial mismatch; Racial preferences; Social Networks; Affirmative action; Employment subsidies;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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