Explaining cross-racial differences in teenage labor force participation: Results from a two-sided matching model

Abstract

White teenagers are substantially more likely to search for employment than black teenagers. This differential occurs despite the fact that, conditional on race, individuals from disadvantaged backgrounds are more likely to search. While the racial wage gap is small, the unemployment rate for black teenagers is substantially higher than that of white teenagers. We develop a two-sided search model where firms are partially able to search on demographics. Model estimates reveal that firms are more able to target their search on race than on age. Employment and wage outcome differences explain half of the racial gap in labor force participation rates. © 2009 Elsevier B.V. All rights reserved.