ABSTRACT
The concept of a competitive labor market is an integral part of the basic neoclassical wage determination model. This chapter explains how the relative economic status of women and blacks may be influenced by local market conditions. Few researchers have attempted to empirically assess whether changes in estimates of labor market discrimination are associated with changes in labor market conditions while accounting for different wage and occupational structures across local labor markets. The chapter suggests that differential treatment of minorities (e.g., discrimination) in the labor market might be accentuated by differing labor market conditions. It explains a general model that investigates the existence of labor market discrimination against women and blacks and how local labor market conditions may affect these estimates. The Blinder/Oaxaca methodology may be adapted to ascertain the influence that local labor market conditions have on wage discrimination.
