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The Substitutability of Labor of Selected Ethnic Groups in the US Labor Market

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  • Kahanec, Martin

    (Central European University)

Abstract

This paper investigates the substitutability of labor of selected ethnic groups in the US labor market. In the generalized Leontief framework, the analysis of US census-based data reveals that labor of non-White ethnic groups is complementary to that of White ethnic group. This finding supports the view that the negative relationship between the relative earnings of an ethnic group and its relative size is a labor market phenomenon. Moreover, it implies that ethnic diversity of labor force has positive effects on aggregate output. While the estimated elasticities of complementarity are relatively small, they are shown to generate significant effects, given the very uneven distribution of ethnic groups across local labor markets, as resulting from long-run migration patterns.

Suggested Citation

  • Kahanec, Martin, 2006. "The Substitutability of Labor of Selected Ethnic Groups in the US Labor Market," IZA Discussion Papers 1945, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1945
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    References listed on IDEAS

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    1. Grant, James H & Hamermesh, Daniel S, 1981. "Labor Market Competition among Youths, White Women and Others," The Review of Economics and Statistics, MIT Press, vol. 63(3), pages 354-360, August.
    2. Borjas, George J, 1983. "The Substitutability of Black, Hispanic, and White Labor," Economic Inquiry, Western Economic Association International, vol. 21(1), pages 93-106, January.
    3. George J. Borjas, 1994. "Long-Run Convergence of Ethnic Skill Differentials: The Children and Grandchildren of the Great Migration," ILR Review, Cornell University, ILR School, vol. 47(4), pages 553-573, July.
    4. Kenneth Arrow, 1971. "The Theory of Discrimination," Working Papers 403, Princeton University, Department of Economics, Industrial Relations Section..
    5. George J. Borjas, 1987. "Immigrants, Minorities, and Labor Market Competition," ILR Review, Cornell University, ILR School, vol. 40(3), pages 382-392, April.
    6. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259, Elsevier.
    7. Kenneth J. Arrow, 1998. "What Has Economics to Say about Racial Discrimination?," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 91-100, Spring.
    8. Barry R. Chiswick, 1988. "Differences in Education and Earnings Across Racial and Ethnic Groups: Tastes, Discrimination, and Investments in Child Quality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(3), pages 571-597.
    9. Grossman, Jean Baldwin, 1982. "The Substitutability of Natives and Immigrants in Production," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 596-603, November.
    10. Hicks, John, 1970. "Elasticity of Substitution Again: Substitutes and Complements," Oxford Economic Papers, Oxford University Press, vol. 22(3), pages 289-296, November.
    11. Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
    12. George J. Borjas, 1994. "Long-Run Convergence of Ethnic Skill Differentials," NBER Working Papers 4641, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Bodvarsson, Örn B. & Sessions, John G., 2008. "The Measurement of Racial Discrimination in Pay between Job Categories: Theory and Test," IZA Discussion Papers 3748, Institute of Labor Economics (IZA).
    2. Bodvarsson, Őrn B. & Papps, Kerry L. & Sessions, John G., 2014. "Cross-assignment discrimination in pay: A test case of major league baseball," Labour Economics, Elsevier, vol. 28(C), pages 84-95.
    3. Bodvarsson, Orn B. & Sessions, John G., 2011. "The measurement of pay discrimination between job assignments," Labour Economics, Elsevier, vol. 18(3), pages 297-309, June.
    4. Kahanec, Martin, 2006. "Ethnic Specialization and Earnings Inequality: Why Being a Minority Hurts but Being a Big Minority Hurts More," IZA Discussion Papers 2050, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    ethnic group; elasticity of substitution; substitutability; labor market;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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