Racial wage inequality: Job segregation and devaluation across US labor markets'

Despite decades of research showing greater black-white inequality in local areas where the black population is relatively large, little is known about the mechanisms for this effect. Using a unique data set of individuals nested within jobs across labor markets, this article tests two possible mechanisms for the black concentration effect on wage inequality: job segregation and devaluation. Results show that black population size is associated with greater segregation of black workers into black-dominated jobs. On the other hand, no evidence is found that the penalty for working in a black-dominated job (the devaluation effect) increases as a function of black population size. The article concludes that discrimination against workers-especially exclusion from better-paying jobs-is an important mechanism for the effect of black population size on the racial wage gap.