Car ownership and the Labor Market of Ethnic Minorities

Pieter A. Gautier, Yves Zenou

Research output: Working paperProfessional

Abstract

We show how small initial wealth differences between low skilled black and white workers can generate large differences in their labor-market outcomes. This even occurs in the absence of a taste for discrimination against blacks or exogenous differences in the distance to jobs. Because of the initial wealth difference, blacks cannot afford cars while whites can. Car ownership allows whites to reach more jobs per unit of time and this gives them a better bargaining position. As a result, in equilibrium, blacks end up with both higher unemployment rates and lower wages than whites. Furthermore, it takes more time for blacks to reach their jobs even though they travel less miles. Those predictions are consistent with the data. Better access to capital markets or better public transportation will reduce the differences in labor market outcomes.
Original languageEnglish
Place of PublicationAmsterdam
PublisherTinbergen Instituut
Publication statusPublished - 2008

Publication series

NameDiscussion paper TI
No.08-106/3

Fingerprint

Ethnic minorities
Ownership
Labour market
Car
Labor market outcomes
Wealth
Wages
Capital markets
Unemployment rate
Discrimination
Prediction
Public transportation
Workers

Cite this

Gautier, P. A., & Zenou, Y. (2008). Car ownership and the Labor Market of Ethnic Minorities. (Discussion paper TI; No. 08-106/3). Amsterdam: Tinbergen Instituut.
Gautier, Pieter A. ; Zenou, Yves. / Car ownership and the Labor Market of Ethnic Minorities. Amsterdam : Tinbergen Instituut, 2008. (Discussion paper TI; 08-106/3).
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Gautier, PA & Zenou, Y 2008 'Car ownership and the Labor Market of Ethnic Minorities' Discussion paper TI, no. 08-106/3, Tinbergen Instituut, Amsterdam.

Car ownership and the Labor Market of Ethnic Minorities. / Gautier, Pieter A.; Zenou, Yves.

Amsterdam : Tinbergen Instituut, 2008. (Discussion paper TI; No. 08-106/3).

Research output: Working paperProfessional

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Gautier PA, Zenou Y. Car ownership and the Labor Market of Ethnic Minorities. Amsterdam: Tinbergen Instituut. 2008. (Discussion paper TI; 08-106/3).