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The Costs of Employment Segregation: Evidence from the Federal Government under Woodrow Wilson

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  • Abhay Aneja
  • Guo Xu

Abstract

We link newly-digitized personnel records of the U.S. government for 1907-1921 to census data to study the segregation of the civil service by race under President Woodrow Wilson. Using a difference-in-differences design around Wilson’s inauguration, we find that the introduction of employment segregation increased the black-white earnings gap by 3.4-6.9 percentage points. This increasing gap is driven by a reallocation of existing black civil servants to lower-paid positions, lowering their returns to education. Importantly, the negative effects extend beyond Wilson’s presidency. Using census data for 1900-1940, we show that segregation caused a relative decline in the home ownership rate of black civil servants. Moreover, by comparing children of black and white civil servants in adulthood, we provide evidence that descendants of black civil servants who were exposed to Wilson’s presidency exhibit lower levels of education, earnings, and social mobility. Our combined results thus document significant short and long-run costs borne by minorities during a unique episode of state-sanctioned discrimination.

Suggested Citation

  • Abhay Aneja & Guo Xu, 2020. "The Costs of Employment Segregation: Evidence from the Federal Government under Woodrow Wilson," NBER Working Papers 27798, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27798
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    More about this item

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation

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