Ethnic Unemployment Rates and Frictional Markets

Laurent Gobillon, Peter Rupert and Etienne Wasmer

In a number of developed countries, the unemployment rate among immigrants and ethnic minorities is clearly higher than the rate for the labour market as a whole. Some see this as a serious matter, particularly as such a gap might be the result of inequality of opportunity. In France, the unemployment rate among African immigrants is six points higher than for other French; in the United States, the rate among African-Americans is nine points higher than for whites. Laurent Gobillon, Peter Rupert and Etienne Wasmer assess the extent to which these differences are linked to spatial and non-spatial factors related to the labour market. Their approach is based on the calibration of a macro-economic model that allows us to see the frictions in both the labour market and the housing market. The dimensions taken into account by this model include distance between place of residence and place of work, and individual strategies – chosen or imposed – of shifting house or changing jobs.
The authors arrive at several interesting conclusions. They show, first of all, that in the two countries studied, reasons related to the labour market itself are the most important in explaining the difference in unemployment rates between the groups in question. Then, they argue that spatial factors explain between 17 and 25 per cent of the difference in unemployment rates among African immigrants and the non-immigrant population. In other words, of the six points of difference in total, spatial factors account for one to one and a half points. For the United States, the authors point out the equally clear role of these factors in explaining between one and one and a half points of the difference in unemployment rates between African-Americans and whites. This difference being more significant than in France (nine points compared with six), spatial factors explain between 10 and 17.5 per cent of the difference in unemployment rates. In conclusion, the authors argue in favour of new research to allow the clarification of the link between ethnic appearance, the housing market and the associated costs of transport.
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Original title of the article: Ethnic Unemployment Rates and Frictional Markets
Published in : Journal of Urban Economics, 79, pp. 108-120 - janvier 2014
Download at : http://www.sciencedirect.com/science/article/pii/S0094119013000533
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