Joseph A. Ritter

Racial Disparity in Unemployment

In the United States, black workers earn less than their white counterparts and have higher rates of unemployment. Empirical work indicates that most of this wage gap is accounted for by differences in cognitive skills that emerge at an early age. In this paper, we demonstrate that the same is not true for black-white disparity in unemployment. A large unexplained unemployment differential motivates the papers second contributiona potential theoretical explanation. This explanation is built around a model that embeds statistical discrimination into the subjective worker evaluation process that lies at the root of the efficiency-wage theory of equilibrium unemployment.

Racial and Ethnic Differences in Nonwage Compensation

Previous research has found that, after controlling for test scores, measured black–white wage gaps are small, but unemployment gaps remain large. This article complements this previous research by examining the incidence of employer‐provided benefits from the same premarket perspective. However, marriage rates differ substantially by race, and the possibility of health insurance coverage through a spouses employer therefore distorts how the distribution of benefits available in the market to an individual is expressed in the distribution of benefits received. Two imputation strategies are used to address this complication. The evidence suggests that benefit availability gaps are small.

Commitment as Investment Under Uncertainty

Irreversible investment and the techniques associated with pricing real options have led to significant advances many areas. We broaden this range of applications, showing how the techniques can apply to many policy problems in finance, macroeconomics, and trade policy. With small changes, standard techniques can handle a wide range of strategic problems related to policy. The decision to commit is like the decision to make an irreversible investment. Explicitly considering and correctly valuing the option to wait makes discretion relatively more attractive, implies that greater uncertainty increases the gain to discretion and results in policy that displays hysteresis.