65 Pages Posted: 13 May 2013

There are 2 versions of this paper

Date Written: June 2012

Abstract

Nearly half of U.S. employers test job applicants and workers for drugs. I use variation in the timing and nature of drug testing regulation to study discrimination against blacks related to perceived drug use. Black employment in the testing sector is suppressed in the absence of testing, consistent with ex ante discrimination on the basis of drug use perceptions. Adoption of pro-testing legislation increases black employment in the testing sector by 7-30 percent and relative wages by 1.4-13.0 percent, with the largest shifts among low-skilled black men. Results suggest that employers substitute white women for blacks in the absence of testing.