Geographic Mobility, Race, and Wage Discrimination

This paper analyzes the relationship between geographic mobility and earnings. We present an equilibrium search model that yields differences between the reservation wages of mobile and immobile workers. The expected wages of mobile workers exceed those of immobile workers due to partial sorting across high- and low-paying firms. An extension to visibly distinct groups with different proportions immobile yields statistical discrimination against immobile group members. Using combined Displaced Workers Files, we find that mobility positively affects earnings and partially explains racial and ethnic earnings differentials. To test for statistical discrimination, we estimate separate earnings functions for union and non-union workers