Black and Latinx Workers Reap Lower Rewards than White Workers from Careers in Big Prosperous Cities

The large labor markets of big prosperous cities offer greater possibilities for workers to gain skills and experience through successively better employment opportunities. This "experience effect" contributes to the higher average wages that are found in big urban areas compared to the economy as a whole. Racial wage inequality is also higher in bigger cities than in the economy on average. We offer an explanation for this pattern, demonstrating that there is substantial racial inequality in the economic returns to work experience acquired in big cities. Using data from the National Longitudinal Survey of Youth, 1979 we find that each year of big city work experience is worth about one quarter to half as much for Black and Latinx workers as it is for White workers, in terms of hourly wages. One-third of this inequality can be explained by racial disparities in the benefits of high-skill work experience. This research identifies a heretofore unknown source of inequality that is distinctly urban in nature, and expands our knowledge of the challenges to reaching inter-racial wage equality.