The economics of diversity

Racial and ethnic economic inequality pervades many markets. In the labor market, there are persistent disparities in earnings and labor force participation (Darity and Myers 2000). In housing markets, there are wide racial and ethnic differences in ownership and access to mortgage lending (Ladd 1998; Munnell et al. 1996; Myers and Chan 1995; Myers and Chung 1996; Yinger 1986). In consumer credit markets, there are substantial differences in the terms of loans and approval rates between blacks and whites (Ards and Myers 2001; Hawley and Fujii 1991; Yinger 1998). In public procurement and contracting, where firms compete for federal, state, and local contracts worth billions of dollars for projects such as highway construction, there are huge disparities between white male-owned firms and women-and minority-owned business enterprises (Echaustegui et al. 1997; Myers and Chan 1996; Myers and Ha 2009). These racial and ethnic differences in market outcomes cannot be fully explained by differences in qualifications or human capital endowments alone.