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Last Hired, First Fired? Black-White Unemployment and the Business Cycle

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Author Info
Couch, Kenneth A. () (University of Connecticut)
Fairlie, Robert W. () (University of California, Santa Cruz)

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Abstract

Past studies have tested the claim that blacks are the last hired during periods of economic growth and the first fired in recessions by examining the movement of relative unemployment rates over the business cycle. Any conclusion drawn from this type of analysis must be viewed as tentative because the cyclical movements in the underlying transitions into and out of unemployment are not examined. Using Current Population Survey data matched across adjacent months from 1989 to 2004, this paper provides the first detailed examination of labor market transitions for prime-age black and white men to test the last-hired, first-fired hypothesis. Considerable evidence is presented that blacks are the first fired as the business cycle weakens. However, no evidence is found that blacks are the last hired. Instead, blacks appear to be initially hired from the ranks of the unemployed early in the business cycle and later are drawn from non-participation. The narrowing of the racial unemployment gap near the peak of the business cycle is driven by a reduction in the rate of job loss for blacks rather than increases in hiring.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3713.

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Length: 53 pages
Date of creation: Sep 2008
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Handle: RePEc:iza:izadps:dp3713

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Related research
Keywords: race; unemployment; business cycle;

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Find related papers by JEL classification:
J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities and Races; Non-labor Discrimination

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Richard B. Freeman & William M. Rodgers III, 1999. "Area Economic Conditions and the Labor Market Outcomes of Young Men in the 1990s Expansion," NBER Working Papers 7073, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Note: For best results & the figures should be printed on a non-Postscript printer. Hoynes & H., . "The Employment, Earnings, and Income of Less-Skilled Workers over the Business Cycle," Institute for Research on Poverty Discussion Papers 1199-99, University of Wisconsin Institute for Research on Poverty. [Downloadable!]
    Other versions:
  3. Black, Dan A, 1995. "Discrimination in an Equilibrium Search Model," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 309-33, April. [Downloadable!] (restricted)
  4. Baker, Michael, 1992. "Unemployment Duration: Compositional Effects and Cyclical Variability," American Economic Review, American Economic Association, vol. 82(1), pages 313-21, March. [Downloadable!] (restricted)
  5. Welch, Finis, 1990. "The Employment of Black Men," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages S26-74, January. [Downloadable!] (restricted)
  6. Kenneth Couch & Mary C. Daly, 2000. "Black-white wage inequality in the 1990s: a decade of progress," Working Papers in Applied Economic Theory 2000-07, Federal Reserve Bank of San Francisco. [Downloadable!]
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  7. Katharine G. Abraham & Robert Shimer, 2001. "Changes in Unemployment Duration and Labor Force Attachment," NBER Working Papers 8513, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Steven J. Davis & John Haltiwanger, 1999. "On the Driving Forces behind Cyclical Movements in Employment and Job Reallocation," American Economic Review, American Economic Association, vol. 89(5), pages 1234-1258, December. [Downloadable!] (restricted)
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  9. Kenneth A. Couch & Mary C. Daly, 2004. "The Improving Relative Status of Black Men," Working papers 2004-12, University of Connecticut, Department of Economics. [Downloadable!]
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  10. Fairlie, Robert W & Sundstrom, William A, 1997. "The Racial Unemployment Gap in Long-Run Perspective," American Economic Review, American Economic Association, vol. 87(2), pages 306-10, May. [Downloadable!] (restricted)
  11. M. Badgett, 1994. "Rising black unemployment: Changes in job stability or in employability?," The Review of Black Political Economy, Springer, vol. 22(3), pages 55-75, March. [Downloadable!] (restricted)
  12. Lynch, Lisa M, 1989. "The Youth Labor Market in the Eighties: Determinants of Re-employment Probabilities for Young Men and Women," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 37-45, February. [Downloadable!] (restricted)
  13. Robert W. Fairlie & William A. Sundstrom, 1999. "The Emergence, persistence, and recent widening of the racial unemployment gap," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 52(2), pages 252-270, January.
  14. Kim B. Clark & Lawrence H. Summers, 1981. "Demographic Differences in Cyclical Employment Variation," NBER Working Papers 0514, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Finis Welch, 2003. "Catching Up: Wages of Black Men," American Economic Review, American Economic Association, vol. 93(2), pages 320-325, May. [Downloadable!]
  16. Davis, Steven J & Haltiwanger, John C, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 819-63, August. [Downloadable!] (restricted)
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  17. Brigitte C. Madrian & Lars John Lefgren, 1999. "A Note on Longitudinally Matching Current Population Survey (CPS) Respondents," NBER Technical Working Papers 0247, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Ralph E. Smith & Jean E Vanski & Charles C. Holt, 1974. "Recession and the Employment of Demographic Groups," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 5(1974-3), pages 737-760. [Downloadable!]
  19. Harry J. Holzer & Paul Offner, 2001. "Trends in Employment Outcomes of Young Black Men, 1979-2000," JCPR Working Papers 245, Northwestern University/University of Chicago Joint Center for Poverty Research.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Julie L. Hotchkiss & M. Melinda Pitts, 2007. "Evidence of demand factors in the determination of the labor market intermittency penalty," Working Paper 2007-16, Federal Reserve Bank of Atlanta. [Downloadable!]
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