Assortative Matching or Exclusionary Hiring? The Impact of Employment and Pay Policies on Racial Wage Differences in Brazil | Zendy

François Gérard | Zendy; Lorenzo Lagos | Zendy; Edson Severnini | Zendy; David Card | Zendy

Open Access

Assortative Matching or Exclusionary Hiring? The Impact of Employment and Pay Policies on Racial Wage Differences in Brazil

Author(s) -

François Gérard,

Lorenzo Lagos,

Edson Severnini,

David Card

Publication year - 2021

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.20181596

Subject(s) - counterfactual thinking , wage , economics , labour economics , allocative efficiency , matching (statistics) , sorting , differential (mechanical device) , race (biology) , demographic economics , assortative mating , psychology , microeconomics , social psychology , statistics , botany , mathematics , engineering , computer science , programming language , biology , aerospace engineering , population , demography , sociology

We measure the effects of firm policies on racial pay differences in Brazil. Non-Whites are less likely to be hired by high-wage firms, explaining about 20 percent of the racial wage gap for both genders. Firm-specific pay premiums for non-Whites are also compressed relative to Whites, contributing another 5 percent for that gap. A counterfactual analysis reveals that about two-thirds of the underrepresentation of non-Whites at higher-wage firms is explained by race-neutral skill-based sorting. Non-skill-based sorting and differential wage setting are largest for college-educated workers, suggesting that the allocative costs of discriminatory hiring and pay policies may be relatively large in Brazil. (JEL J15, J24, J31, J41, J46, J71, O15)

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