Can Minorities Escape Wage Discrimination by Forming Firms?

Can Minorities Escape Wage Discrimination by Forming Firms? The persistence of wage discrimination raises a number of questions, including the following: if majority-owned firms continue to discriminate against minority workers, is it possible for the minority workers to escape that discrimination by forming a firm? Non-discriminating minority firms could then provide a refuge for other minority workers. In Becker’s classic treatment of discrimination by firms he posits a variation of this idea. He suggests that if the number of jobs at non-discriminating firms is greater than the number of minority workers, then these minority workers will all find their way to and be employed by the non-discriminating firms. In this paper I employ simulations to examine the extent to which minority workers can successfully find employment at non-discriminating minority firms in the presence of labor market frictions. These simulations also demonstrate the importance of access to capital for minority entrepreneurs. Computational Economics Springer Journals

Can Minorities Escape Wage Discrimination by Forming Firms?

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Springer US
Copyright © 2016 by Springer Science+Business Media New York
Economics; Economic Theory/Quantitative Economics/Mathematical Methods; Computer Appl. in Social and Behavioral Sciences; Operations Research/Decision Theory; Behavioral/Experimental Economics; Math Applications in Computer Science
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