Why does job segregation lead to wage inequality among African Americans? Person, place, sector, or skills?

This paper investigates the relationship between job segregation by race and wages among African Americans. In particular, we look at why African Americans employed in predominantly Black jobs are paid lower wages compared to African Americans in predominantly White jobs. We ask whether the reason for the wage gap is found in characteristics of individuals, in the neighborhood where jobs are located, in the position of industries and firms within a segmented economy, or in skill requirements of jobs. We address this question using the Atlanta sample of the Multi-City Study of Urban Inequality. In Atlanta, African Americans employed full-time working in jobs where the majority of their co-workers are also Black are earning $3,470 less annually than African Americans employed in predominantly White jobs. We find that the wage gap among African Americans created by job segregation is not the result of residential segregation, as the spatial mismatch thesis proposes. Instead, the gap appears to be driven by the skill requirements of the jobs in which African Americans are employed. Predominantly Black jobs are overrepresented within the positions that experienced falling returns to wages with the restructuring of the U.S. economy-service industries and occupations that require few skills. (C) 2001 Academic Press.