Labor mobility and racial discrimination

We examine the effect of labor mobility constraints on racial wage discrimination. We show that when monopsony power is low because of relaxed labor mobility constraints, firms cannot act on their prejudice and discrimination disappears. This prediction is taken to the data by using an exogenous mobility shock on the European football labor market. The Bosman ruling lifted restrictions on European player mobility in 1995. Exploiting racial differences in a panel of top English clubs, we compare the pre-and post-Bosman ruling market. We find evidence that wage discrimination disappears only for workers whose mobility constraints have been lifted. (c) 2021 Elsevier B.V. All rights reserved.