In 1968, John Kain published a widely cited article in which he argued that the low levels of black employment was in part attributable to an increasing number of jobs, particularly manufacturing jobs, that were moving to the suburban ring and to housing market discrimination practices that restricted blacks’ residential choices to the central city. In the 1980s, the spatial mismatch hypothesis became a dominant theory of black joblessness, particularly for black men, as a result of the attention that Wilson’s underclass thesis of entrenched black poverty received. In neoclassical economics, economists argue that pure discrimination is costly to employers. The chapter discusses racial discrimination in labor markets to determine its existence and magnitude. It examines key bodies of evidence with regard to the spatial mismatch hypothesis, paying particular attention to how race can confound the results of such studies.