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Racial prejudice and labour market penalties during economic downturns

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  • Johnston, David W.
  • Lordan, Grace

Abstract

Do economic downturns encourage racist attitudes? Does this in-turn lead to worse labour market outcome for minorities? We assess these important questions using British attitude and labour force data. The attitude data show that racial prejudice is countercyclical, with the effect driven by large increases for high-skilled middle-aged working men – a 1%-point increase in unemployment is estimated to increase self-reported racial prejudice by 4%-points. Correspondingly, the labour force data show that racial employment and wage gaps are counter-cyclical, with the largest effects also observed for high-skilled men, especially in the manufacturing and construction industries – a 1%-point increase in unemployment is estimated to increase the wage gap by 3%. These results are entirely consistent with the theoretical literature, which proposes that racial prejudice and discrimination are the result of labour market competition among individuals with similar traits, and that the effects of this competition are exacerbated during periods of economic downturn.

Suggested Citation

  • Johnston, David W. & Lordan, Grace, 2016. "Racial prejudice and labour market penalties during economic downturns," European Economic Review, Elsevier, vol. 84(C), pages 57-75.
  • Handle: RePEc:eee:eecrev:v:84:y:2016:i:c:p:57-75
    DOI: 10.1016/j.euroecorev.2015.07.011
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    Cited by:

    1. Button, Patrick & Walker, Brigham, 2020. "Employment discrimination against Indigenous Peoples in the United States: Evidence from a field experiment," Labour Economics, Elsevier, vol. 65(C).
    2. Ahmed, Ali & Hammarstedt, Mats, 2019. "Ethnic Discrimination in Contacts with Public Authorities: A Correspondence Test Among Swedish Municipalities," Working Paper Series 1271, Research Institute of Industrial Economics.
    3. Fabio Berton & Sauro Mocetti & Andrea F. Presbitero & Matteo Richiardi, 2018. "Banks, Firms, and Jobs," Review of Financial Studies, Society for Financial Studies, vol. 31(6), pages 2113-2156.
    4. Bonick, Matthew & Farfan-Vallespin, Antonio, 2018. "The Reversal of Fortune, Extractive Institution and the Historical Roots of Racism," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181569, Verein für Socialpolitik / German Economic Association.
    5. Arjun Jayadev & Robert Johnson, 2017. "Tides and Prejudice: Racial Attitudes During Downturns in the United States 1979–2014," The Review of Black Political Economy, Springer;National Economic Association, vol. 44(3), pages 379-392, December.
    6. Bonick, Matthew & Farfán-Vallespín, Antonio, 2018. "The reversal of fortune, extractive institutions and the historical roots of racism," The Constitutional Economics Network Working Papers 06-2018, University of Freiburg, Department of Economic Policy and Constitutional Economic Theory.

    More about this item

    Keywords

    Prejudice; Recessions; Racism; Discrimination;

    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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