Assortative Matching or Exclusionary Hiring? The Impact of Employment and Pay Policies on Racial Wage Differences in Brazil

We measure the effects of firm policies on racial pay differences in Brazil. Non-Whites are less likely to be hired by high-wage firms, explaining about 20 percent wage gap for both genders. Firm-specific premiums non-Whites also compressed relative Whites, contributing another 5 that gap. A counterfactual analysis reveals two-thirds underrepresentation at higher-wage firms is explained race-neutral skill-based sorting. Non-skill-based sorting and differential setting largest college-educated workers, suggesting allocative costs discriminatory hiring may relatively large (JEL J15, J24, J31, J41, J46, J71, O15)