Inequality in housing and labor markets: three essays

This dissertation is made up of three essays that examine racial and gender differentials in labor and housing markets. The first essay uses unique data on local television news to examine how firms may compete via employee differentiation in response to customer prejudice. The results indicate that there is a negative correlation between the racial, gender, and age composition of competing stations. Moreover, the ratings data suggest that the stations with relatively few blacks on-air are catering to the more discriminatory customers. While a similar result is found for age and gender, the reverse holds for other groups, suggesting possible tastes for diversity for Hispanics and Asians. Taken as a whole, the evidence supports a new theoretical model in which firms differentiate via the characteristics of their employees in response to customer prejudice. The second essay disentagles the relationship between race, neighborhood characteristics, and housing prices. Because race and neighborhood characteristics are strongly correlated, studies of racial housing price differentials have yielded results that vary widely depending on the types of neighborhood controls used. This paper shows that even with relatively thorough neighborhood controls, there is still evidence that correlation between the error term and regressors is a source of bias. While recent studies have tended to find evidence of a negative premium for blacks, fixed effects estimates in this paper indicate that black owners pay premiums of around 10 percent for housing. Moreover, house values decline in neighborhoods as the percentage of blacks increases, suggesting prejudicial attitudes. The third essay examines the labor market effects of Proposition 209, which ended state affirmative action programs in California. I use Current Population Survey (CPS) data and triple difference techniques to take advantage of the natural experiment presented by this change in state law to gauge the labor market impacts of ending affirmative action programs. There appears to have been little change in the relative unemployment rates of women and minorities, but labor force participation declined sharply. This decline suggests that either affirmative action programs in California had been inefficient or that they failed to create lasting change in prejudicial attitudes.