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Historical Trends in Racial Inequality

Historical Trends in Racial Inequality. Racial Inequality

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Page 1: Historical Trends in Racial Inequality. Racial Inequality

Historical Trends in Racial Inequality

Page 2: Historical Trends in Racial Inequality. Racial Inequality

Racial Inequality

Page 3: Historical Trends in Racial Inequality. Racial Inequality

Racial Inequality

What types of explanations can account for this trend?

Page 4: Historical Trends in Racial Inequality. Racial Inequality

Racial Inequality

Migration What is basic argument?

Why might this not be the whole story?

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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.

Page 6: Historical Trends in Racial Inequality. Racial Inequality

Racial Inequality

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Racial Inequality

Card and Krueger (1992)

Page 8: Historical Trends in Racial Inequality. Racial Inequality

Racial Inequality

Card and Krueger (1992)

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Racial Inequality

Card and Krueger (1992)

Page 10: Historical Trends in Racial Inequality. Racial Inequality

Racial Inequality

Card and Krueger (1992) What accounts for this relative increase in

return to schooling for blacks relative to whites in the south?

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Racial Inequality

Card and Krueger (1992)

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Racial Inequality

Card and Krueger (1992) “Our estimates suggest that measures of

school quality can explain 15-25 percent of the convergence in relative rates of return to schooling for Southern-born black workers between 1960-1980.”

Page 13: Historical Trends in Racial Inequality. Racial Inequality

Racial Inequality

Decreased Labor Force Participation What is explanation for how changing labor

force participation rates affect racial wage inequality?

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Racial Inequality

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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?

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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?

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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?

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Diminished Discrimination (cont.)

2. Employers could be sued for actively engaging in wage discrimination by EEOC.

Problems?

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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

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Diminished Discrimination (cont.) How does discrimination persist?

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Diminished Discrimination (cont.)

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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

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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.