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Holzer, Harry J., and Keith R. Ihlandfeldt. "Customer Discrimination and Employment Outcomes for Minority Workers." PSC Research Report No. 96-377. November 1996.
In this paper we investigate the effects of consumer discrimination on the employment and earnings of minorities, particularly blacks. We do so using data from a new survey of employers in four large metropolitan areas in the U.S. Our results show that the racial composition of an establishment's customers has sizable effects on the race of who gets hired, particularly in jobs that involve direct contact with customers. While we find evidence of customer discrimination in both predominantly white and black establishments, the net effect of such discrimination appears to be some reduction in overall labor demand and wages for blacks. Evidence is also presented which suggests that the role of customer discrimination may be growing more important over time.