Can imports mitigate racial earnings inequality?

Abstract

Purpose

The purpose of this paper is to extend recent literature regarding the effects of competition on racial earnings by examining the effects of global competition on racial wages of union and non‐union workers of different skill levels. Additionally, it is intended that inference be drawn regarding whether global competition is a viable means to eliminate racial wage discrimination.

Design/methodology/approach

This paper utilizes quantile regression to examine the effect of global competition on the racial wage gap of workers in high‐ and low‐concentration industries at different points along the earnings distribution. Additionally, the analysis utilizes the highest level of import penetration in each industry over the sample period to examine whether global competition is a viable means to eliminate racial wage discrimination.

Findings

In concentrated industries, non‐union whites at most skill levels receive a substantial wage premium compared with their black counterparts. Further, imports reduce racial earnings inequality by significantly decreasing the wages of low‐ and medium‐skill non‐union whites. However, imports cannot mitigate racial earnings discrimination for non‐union workers at most skill levels.

Practical implications

These findings suggest that, if market forces cannot alleviate racial wage discrimination, government anti‐discriminatory policies may be a necessary measure.

Originality/value

No previous study has examined the effect of global competition on the racial wage gap of workers of different skill levels. Further, no study has empirically tested whether international competition is a viable means to eliminate racial wage discrimination.

Citation

Agesa, J., Agesa, R.U. and Lopes, C. (2011), "Can imports mitigate racial earnings inequality?", Journal of Economic Studies, Vol. 38 No. 2, pp. 156-170. https://doi.org/10.1108/01443581111128398