Imports, unionization and racial wage discrimination in the US

Past studies of the relationship between competition and racial wages find that domestic competition reduces racial wage discrimination of nonunion workers. This article examines the effects of foreign competition on racial wages of union and nonunion workers utilizing an empirical model which allows for cluster-adjusted SEs by industry. Such a procedure allows independence of observations across industries but not within industries, thereby not overstating the significance of industry invariant controls. In this analysis, clustered SEs prevent the overstatement of the significance of imports as a means to reduce earnings discrimination. We find evidence of a wage premium for nonunion white workers in concentrated industries; however, imports cause the wages of nonunion whites to converge towards market rates. In contrast, for union workers in concentrated industries, wage standardization provides a sanctuary from market power initiated discrimination such that imports play a limited role in reducing discrimination.