This paper tests for racial discrimination by white and nonwhite male workers using the states as the unit of observation. It is shown theoretically that white (nonwhite) employee discrimination creates a component of white (nonwhite) earnings inequality within skill levels which is higher, the higher the fraction of nonwhites in the labor force. The "job-rationing" hypothesis predicts a negative (positive) partial effect of percentage nonwhite on white (nonwhite) earnings inequality. Other discrimination hypotheses offer no prediction. Empirically, the effect of percentage nonwhite on earnings inequality is positive and significant for whites, but not significant for whites.

This study is concerned with the determinants of dominant language fluency, its effects on earnings, and its endogeneity with earnings among immigrants. Dominant language fluency is hypothesized to be a function of three fundamental variables: exposure to the language, efficiency in second language acquisition, and economic benefits from language fluency. Conceptual variables with empirical counterparts are developed. Earnings are hypothesized to be a function of language skills, among other variables. Ordinary least squares, instrumental variables, and sample selection bias techniques are used to estimate the equations for Australia. Comparisons are made with analyses for the United States, Canada, and Israel.