Clem Aeppli (Harvard University)

Workplace Segregation and the Structure of Racial Earnings Inequality in the US 

In the last forty years, one's earnings and wellbeing have increasingly come to depend on where one works. How has this reshaped racial and ethnic earnings disparities? I draw on American employer and employee microdata to trace the history of black and Hispanic workers' concentration in marginal establishments from the 1970s to the present. First, black and Hispanic workers have become increasingly siloed into especially low paying, low revenue firms. Second, about half of this trend has been driven by the movement of poorly-compensated occupations to low-paying establishments; this is consistent with descriptions of workplace fissuring and narrowing. Third, this de facto segregation exacerbates the black-white and Hispanic-white pay gaps by 13% and 27%, respectively, in recent years. These results establish that concentration in marginal establishments -- though already identified in the 1980s -- has become much more significant in an era of widening between-firm inequalities. Workplace segregation is a key motor of racial and ethnic gaps today.