Privatization, City Residency, and Black-White Earnings Differentials: Evidence from the Public Transit Sector

Privatization, City Residency, and Black-White Earnings Differentials: Evidence from the Public... Becker's theory on the economics of discrimination suggests that enhanced competition creates a business environment that discourages employers from paying racial earnings differences. This study tests this hypothesis by examining black-white earnings differentials for public transit bus drivers for pre- and post-privatization periods. The findings reveal an erosion of the racial earnings differential in the post-privatization period which is consistent with the Becker hypothesis. Public transit black union drivers earned more than their white counterparts prior to privatization. City residency accounts for 36 percent of this premium. However, the city-residency earnings advantage and the black-white union premium declinedappreciably in the post-privatization period. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Privatization, City Residency, and Black-White Earnings Differentials: Evidence from the Public Transit Sector

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2002 by Kluwer Academic Publishers
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1023/A:1020452001789
Publisher site
See Article on Publisher Site

Abstract

Becker's theory on the economics of discrimination suggests that enhanced competition creates a business environment that discourages employers from paying racial earnings differences. This study tests this hypothesis by examining black-white earnings differentials for public transit bus drivers for pre- and post-privatization periods. The findings reveal an erosion of the racial earnings differential in the post-privatization period which is consistent with the Becker hypothesis. Public transit black union drivers earned more than their white counterparts prior to privatization. City residency accounts for 36 percent of this premium. However, the city-residency earnings advantage and the black-white union premium declinedappreciably in the post-privatization period.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Oct 13, 2004

References

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