DP6155 Why do Black Workers Search Less? A Transport-Mode Based Theory

Author(s): Yves Zenou
Publication Date: March 2007
Keyword(s): ethnic minorities, job search, multiple job centres, spatial labour markets
JEL(s): D83, J15, J64, R1
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=6155

We develop a search matching model in which blacks and whites are totally identical, except for the fact that they use different transport modes. We find that whites, who use faster transport modes (i.e. cars) than blacks (who use public transport), do search more intensively and extensively, and experience lower unemployment rate. Indeed, when deciding their optimal search intensities, all workers trade off short-run losses with long-run gains. However, because they use a faster transport mode, white job-seekers anticipate that they can reach jobs located further away so they can increase their maximal distance of search. This, in turn, induces firms to create more jobs, which finally motivate white workers to search more because of better opportunities. We also show that whites obtain higher wages. Indeed, in our model, each worker negotiates his/her wage with the firm using the Nash-bargaining rule. Because white workers have better outside options than blacks since their labour market tightness as well as the maximal distance of search are higher, they obtain a higher wage.