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LABOR MARKET DISCRIMINATION AND CAPITAL: THE EFFECTS OF FAN DISCRIMINATION ON STADIUM AND ARENA CONSTRUCTION

Authors

  • ÖRN B. BODVARSSON,

    1. Bodvarsson: Department of Economics, St. Cloud State University, St. Cloud, MN 56301. Phone 1-320-308-2225, Fax 1-320-308-2228, E-mail obbodvarsson@stcloudstate.edu
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  • BRAD R. HUMPHREYS

    1. Humphreys: Department of Economics, University of Alberta, Edmonton, Alberta, Canada. Phone 1-780-492-5143, Fax 1-780-492-3300, E-mail brad.humphreys@ualberta.ca
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    • We thank Kirk Kerr, seminar participants at the 2006 WEAI Annual Conference, and DePaul University for a number of helpful comments and Maya Skowron and Tiffany Richardson for their outstanding research assistance.


Abstract

We investigate the possibility that labor market discrimination affects capital. Previous research indicates that discrimination affects wages and employment in labor markets. However, the effects of discrimination on other inputs to production are not known. We develop a model of the optimal capital stock in the presence of customer discrimination and test this model using data on sports facility construction. The empirical evidence suggests that teams in cities with a larger white population and more racial segregation put less capital in place, confirming the predictions of the model about the effect of customer discrimination on capital inputs. (JEL J7, D24, L83)

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