Racial Wage Disparity in US Cities

This paper estimates the conditional wage gaps between black and white full-time male workers at the metropolitan statistical area (MSA) level using data from the 1990 and 2000 U.S. Censuses. The magnitudes of the wage gaps are found to vary substantially across location. As predicted in Becker's (The economics of discrimination, University of Chicago Press, Chicago, 1957) seminal theory on wage discrimination, we find that the wage gaps are greater in MSAs that have a larger proportion of black workers in the labor force. This is the most consistent result across all specifications and years. We also find the gaps to be greater where there is an overrepresented black population in jail and a more segregated population if the MSA is in the South. The proportion of workers covered by a collective bargaining agreement in the private sector is associated with greater relative black earnings. We find that although the relationship between race and wages has diminished over time as famously suggested in Wilson (The declining significance of race: Blacks and changing American institutions, University of Chicago Press, Chicago, 1978), the significance of race remains.