Historical Trends in Racial Inequality
Racial Inequality
What types of explanations can account for this trend?
Racial Inequality Migration What is basic argument? Why might this not be the whole story?
Racial Inequality Educational Gains Could work in three ways: Greater relative increases in number of years of education for blacks than whites over the past 50 yrs. Greater relative improvement of quality of schools attended by black than whites. Greater relative increases in the labor market return to education for blacks than whites.
Racial Inequality
Card and Krueger (1992)
Racial Inequality Card and Krueger (1992)
Racial Inequality Card and Krueger (1992)
Racial Inequality Card and Krueger (1992) What accounts for this relative increase in return to schooling for blacks relative to whites in the south?
Racial Inequality Card and Krueger (1992)
Racial Inequality Card and Krueger (1992) “Our estimates suggest that measures of school quality can explain percent of the convergence in relative rates of return to schooling for Southern-born black workers between ”
Racial Inequality Decreased Labor Force Participation What is explanation for how changing labor force participation rates affect racial wage inequality?
Racial Inequality
Some of “quality of education” gains clearly due to Federal discrimination policy in education---namely desegregation of schools via Brown vs. Board of Education. However, a substantial portion of black progress is unexplained by more education, migration, better quality education, and declining labor market participation by low skilled black workers. What explains the remaining progress? A relatively higher increase in rate-of-return to education for blacks than whites? Why could this be the case?
Racial Inequality Diminished Discrimination Major civil rights legislation was implemented in 1965 and 1968 that was aimed at increasing penalties to active discrimination. Two major laws: 1. Firms receiving Federal contracts had to not only be non- discriminatory, but had to have active affirmative action plans. 2. Employers could be sued for actively engaging in wage discrimination by EEOC. What might be issues with these laws explaining decreases in racial inequality?
Racial Inequality Diminished Discrimination (cont.) 1. Firms receiving Federal contracts had to not only be non- discriminatory, but had to have active affirmative action plans. Problems: Federal contractors only a small sector of labor market. Black wages, relative to white wages, appeared to rise more rapidly in the non-Federal contractor sector than in the Federal contractor sector. Do these findings negate the argument that these types of anti- discrimination laws had big effects?
Racial Inequality Diminished Discrimination (cont.) 2. Employers could be sued for actively engaging in wage discrimination by EEOC. Problems?
Racial Inequality Diminished Discrimination (cont.) “Studies that focus solely on the impact of fair employment policy miss the crucial point that it was only part of the total federal effort directed against the way of life that previously excluded blacks from many sectors of southern society.” -Heckman & Donohue
Racial Inequality Diminished Discrimination (cont.) How does discrimination persist?
Racial Inequality Diminished Discrimination (cont.)
Racial Inequality Diminished Discrimination (cont.) “Substantial numbers of Southern employers appear to have been willing to gain access to the supply of cheap black labor, but required the excuse of the Federal pressure to defy long-standing community norms regarding employment of blacks.” -Heckman & Donohue
Racial Inequality Summary “The story of black economic progress since 1940 is not one of uniform secular advance, but rather episodic change. Northern migration of blacks out of the low-wage South played a major role until the mid-1960s, but accounts for little of the post-1964 change.” (Donohue and Heckman) Major earnings gains made by black workers relative to whites during 1960s and 1970s appear to be due to two primary causes: 1. Substantial relative gains in quality of education for black Americans, especially in the south, after school desegregation. 2. Institutional changes in discrimination following passage of major civil rights legislation. Trends toward racial equality in earnings started to stagnate in mid-1970s and has continued to stall over last 30 years.