Statistical Discrimination and the Distribution of Wages

We characterize the conditions under which the wage distributions for two groups are consistent with a general model of statistical discrimination. We adapt this theoretical characterization to develop a novel empirical test, the rejection of which we interpret as evidence of taste-based discrimination. In doing so, we provide a theoretical foundation via which the wage structure effect in the decomposition of wage distributions can be interpreted as evidence of taste-based discrimination. We provide a proof of concept application using Census and NLSY-79 data, which suggests taste-based discrimination at work against Black male workers in several broad occupation categories