Topic: Macroeconomics of Racial Disparities: Discrimination, Labor Market, and Wealth

Speaker: Yang Guanyi, Colorado College

Time: October 24, 2024 ,14:30      

Venue: EMS 419

Abstract: This paper investigates how racial discrimination in hiring impacts employment, wages, and wealth between black and white workers. We develop a labor search-and-matching model that includes both black and white workers and firms with and without racially biased hiring practices. We find that labor market frictions allow discriminatory practices to persist as an equilibrium outcome. These practices contribute significantly to the black-to-white wage and wealth gaps, explaining approximately 52% of the average wage gap and 16% of the median wealth gap. Moreover, discriminatory hiring exacerbates unemployment and wage volatility for black workers, leading to countercyclical racial unemployment gaps and procyclical racial wage disparities. Removing prejudiced firms reduces these disparities and enhances black workers' welfare, though the economic output and welfare for white workers decline slightly due to imperfect substitution by non-prejudiced firms.

Guest Bio: Yang Guanyi is the Gerald L. Schlessman Assistant Professor in the Department of Economics and Business at Colorado College and a fellow of the Global Labor Organization (GLO). He received his Ph.D. in economics from The Ohio State University, where his research focused on macroeconomics and labor economics. His research focuses on the development of Heterogeneous Agent General Equilibrium Models (HAGEMs) based on microdata and theory, and the use of these models to analyze a variety of policy-relevant issues. Current research focuses on the impact of endogenous labor market frictions on the economic cycle and the interrelationship between wealth and income inequality and their macro implications.