Hispanics and the Local Labour Market Earnings of Blacks

The effect of the relative supply of Hispanics on the relative earnings of Blacks in US labour markets is examined. The data source for the empirical estimates is the March 1988 Current Population Survey. The results support one of the key features of the Becker model of discrimination,namely, that the extent of discrimination is affected by relative supply. Results also indicated that an increase in the number of Hispanics in a local labour market will reduce the income of otherwise comparable Blacks. However, if the Black labour supply in a local labour market is sufficiently large,a given percentage increase in the relative supply of Blacks will have a more negative impact on average Black earnings than would the same percentage increase in the number of Hispanics.