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Bank Deregulation and Racial Inequality in America

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  • Levine, Ross
  • Rubinstein, Yona
  • Levkov, Alexey

Abstract

We use the cross-state, cross-time variation in bank deregulation across the U.S. states to assess how improvements in banking systems affected the labor market opportunities of black workers. Bank deregulation from the 1970s through the 1990s improved bank efficiency, lowered entry barriers facing nonfinancial firms, and intensified competition for labor throughout the economy. Consistent with Becker's (1957) theory of racial discrimination, we find that in economies where employers have sufficiently strong racial biases, deregulation-induced improvements in the banking system boosted black workers' relative wages by facilitating the entry of new firms and reducing the manifestation of racial prejudices in labor markets.

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File URL: http://dx.doi.org/10.1561/104.00000013
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Bibliographic Info

Article provided by now publishers in its journal Critical Finance Review.

Volume (Year): 3 (2014)
Issue (Month): 1 (January)
Pages: 1-48

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Handle: RePEc:now:jnlcfr:104.00000013

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Web page: http://www.nowpublishers.com/

Related research

Keywords: Discrimination; Imperfect Competition; Banks; Regulation;

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  16. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
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