IDEAS home Printed from https://ideas.repec.org/a/eee/eecrev/v84y2016icp57-75.html
   My bibliography  Save this article

Racial prejudice and labour market penalties during economic downturns

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0014292115001075
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.euroecorev.2015.07.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Anna Maria Mayda, 2006. "Who Is Against Immigration? A Cross-Country Investigation of Individual Attitudes toward Immigrants," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 510-530, August.
    2. Francesco Caselli & Wilbur John Coleman II, 2013. "On The Theory Of Ethnic Conflict," Journal of the European Economic Association, European Economic Association, vol. 11, pages 161-192, January.
    3. John Smith, 2012. "Reputation, Social Identity and Social Conflict," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(4), pages 677-709, August.
    4. Dustmann, Christian & Glitz, Albrecht & Vogel, Thorsten, 2010. "Employment, wages, and the economic cycle: Differences between immigrants and natives," European Economic Review, Elsevier, vol. 54(1), pages 1-17, January.
    5. Dustmann Christian & Preston Ian P, 2007. "Racial and Economic Factors in Attitudes to Immigration," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-41, November.
    6. Johnston, David W. & Lordan, Grace, 2012. "Discrimination makes me sick! An examination of the discrimination–health relationship," Journal of Health Economics, Elsevier, vol. 31(1), pages 99-111.
    7. David Card & Alan B. Krueger, 1992. "School Quality and Black-White Relative Earnings: A Direct Assessment," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 151-200.
    8. Matthew A. Gentzkow & Jesse M. Shapiro, 2004. "Media, Education and Anti-Americanism in the Muslim World," Journal of Economic Perspectives, American Economic Association, vol. 18(3), pages 117-133, Summer.
    9. Kevin Lang & Michael Manove & William T. Dickens, 2005. "Racial Discrimination in Labor Markets with Posted Wage Offers," American Economic Review, American Economic Association, vol. 95(4), pages 1327-1340, September.
    10. Dawkins, Casey J. & Shen, Qing & Sanchez, Thomas W., 2005. "Race, space, and unemployment duration," Journal of Urban Economics, Elsevier, vol. 58(1), pages 91-113, July.
    11. Frijters, P., 1998. "Discrimination and job-uncertainty," Journal of Economic Behavior & Organization, Elsevier, vol. 36(4), pages 433-446, September.
    12. Alan Manning & Barbara Petrongolo, 2008. "The Part‐Time Pay Penalty for Women in Britain," Economic Journal, Royal Economic Society, vol. 118(526), pages 28-51, February.
    13. repec:eee:labchp:v:3:y:1999:i:pc:p:3143-3259 is not listed on IDEAS
    14. Donohue, John J, III & Heckman, James, 1991. "Continuous versus Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1603-1643, December.
    15. Stéphane Pallage & Christian Zimmermann, 2006. "On voters’ attitudes towards unemployment insurance subsidies across regions: a Canadian simulation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 391-410, June.
    16. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    17. Kevin Lang & Michael Manove, 2011. "Education and Labor Market Discrimination," American Economic Review, American Economic Association, vol. 101(4), pages 1467-1496, June.
    18. Alan B. Krueger & Jörn-Steffen Pischke, 1997. "A Statistical Analysis of Crime against Foreigners in Unified Germany," Journal of Human Resources, University of Wisconsin Press, vol. 32(1), pages 182-209.
    19. Arthur H. Goldsmith & Darrick Hamilton & William Darity Jr, 2006. "Shades of Discrimination: Skin Tone and Wages," American Economic Review, American Economic Association, vol. 96(2), pages 242-245, May.
    20. Bernt Bratsberg & Erling Barth & Oddbjørn Raaum, 2006. "Local Unemployment and the Relative Wages of Immigrants: Evidence from the Current Population Surveys," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 243-263, May.
    21. Jeff Biddle & Daniel Hamermesh, 2013. "Wage discrimination over the business cycle," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-19, December.
    22. Nico Voigtländer & Hans-Joachim Voth, 2013. "Married to Intolerance: Attitudes toward Intermarriage in Germany, 1900-2006," American Economic Review, American Economic Association, vol. 103(3), pages 79-85, May.
    23. Kenneth F. Scheve & Matthew J. Slaughter, 2001. "Labor Market Competition And Individual Preferences Over Immigration Policy," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 133-145, February.
    24. Baert, Stijn & Cockx, Bart & Verhaest, Dieter, 2013. "Overeducation at the start of the career: Stepping stone or trap?," Labour Economics, Elsevier, vol. 25(C), pages 123-140.
    25. Antecol, Heather & Cobb-Clark, Deborah A., 2010. "The effect of community-level socio-economic conditions on threatening racial encounters," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 517-529, November.
    26. Dustmann, Christian & Preston, Ian, 2001. "Attitudes to Ethic Minorities, Ethnic Context and Location Decisions," Economic Journal, Royal Economic Society, vol. 111(470), pages 353-373, April.
    27. Diane Lauderdale, 2006. "Birth outcomes for Arabic-named women in California before and after September 11," Demography, Springer;Population Association of America (PAA), vol. 43(1), pages 185-201, February.
    28. Sonja C. Kassenboehmer & Sonja G. Schatz, 2014. "Re-employment Expectations and the Eye of Providence," Melbourne Institute Working Paper Series wp2014n11, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    29. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
    30. Armin Falk & Andreas Kuhn & Josef Zweimüller, 2011. "Unemployment and Right‐wing Extremist Crime," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(2), pages 260-285, June.
    31. Kenneth Y. Chay, 1998. "The Impact of Federal Civil Rights Policy on Black Economic Progress: Evidence from the Equal Employment Opportunity Act of 1972," ILR Review, Cornell University, ILR School, vol. 51(4), pages 608-632, July.
    32. Richard B. Freeman, 1973. "Changes in the Labor Market for Black Americans, 1948-72," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(1), pages 67-132.
    33. Giovanni Facchini & Anna Maria Mayda, 2009. "Does the Welfare State Affect Individual Attitudes toward Immigrants? Evidence across Countries," The Review of Economics and Statistics, MIT Press, vol. 91(2), pages 295-314, May.
    34. Hainmueller, Jens & Hiscox, Michael J., 2010. "Attitudes toward Highly Skilled and Low-skilled Immigration: Evidence from a Survey Experiment," American Political Science Review, Cambridge University Press, vol. 104(1), pages 61-84, February.
    35. Joseph A Ritter & Lowell J Taylor, 2011. "Racial Disparity in Unemployment," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 30-42, February.
    36. Kevin Lang & Jee-Yeon K. Lehmann, 2012. "Racial Discrimination in the Labor Market: Theory and Empirics," Journal of Economic Literature, American Economic Association, vol. 50(4), pages 959-1006, December.
    37. O'Neill, June, 1985. "The Trend in the Male-Female Wage Gap in the United States," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 91-116, January.
    38. Bollini, Paola & Siem, Harald, 1995. "No real progress towards equity: Health of migrants and ethnic minorities on the eve of the year 2000," Social Science & Medicine, Elsevier, vol. 41(6), pages 819-828, September.
    39. Jonathan Guryan & Kerwin Kofi Charles, 2013. "Taste‐based or Statistical Discrimination: The Economics of Discrimination Returns to its Roots," Economic Journal, Royal Economic Society, vol. 123(11), pages 417-432, November.
    40. Fryer Jr., Roland G. & Torelli, Paul, 2010. "An empirical analysis of 'acting white'," Journal of Public Economics, Elsevier, vol. 94(5-6), pages 380-396, June.
    41. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259, Elsevier.
    42. D.H. Blackaby & D.G. Leslie & P.D. Murphy, 2002. "White-ethnic minority earnings and employment differentials in Britain: evidence from the LFS," Oxford Economic Papers, Oxford University Press, vol. 54(2), pages 270-297, April.
    43. Erling Barth & Bernt Bratsberg & Oddbjørn Raaum, 2004. "Identifying Earnings Assimilation of Immigrants under Changing Macroeconomic Conditions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(1), pages 1-22, March.
    44. Kenneth J. Arrow, 1998. "What Has Economics to Say about Racial Discrimination?," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 91-100, Spring.
    45. Christian Dustmann & Francesca Fabbri, 2005. "Immigrants in the British labour market," Fiscal Studies, Institute for Fiscal Studies, vol. 26(4), pages 423-470, December.
    46. Kerwin Kofi Charles & Jonathan Guryan, 2008. "Prejudice and Wages: An Empirical Assessment of Becker's The Economics of Discrimination," Journal of Political Economy, University of Chicago Press, vol. 116(5), pages 773-809, October.
    47. DiPasquale, Denise & Glaeser, Edward L., 1999. "Incentives and Social Capital: Are Homeowners Better Citizens?," Journal of Urban Economics, Elsevier, vol. 45(2), pages 354-384, March.
    48. Derek Leslie & Joanne Lindley & Leighton Thomas, 2001. "Decline and fall: Unemployment among Britain's non‐white ethnic communities 1960–1999," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 164(2), pages 371-387.
    49. Orley Ashenfelter, 1970. "Changes in Labor Market Discrimination Over Time," Journal of Human Resources, University of Wisconsin Press, vol. 5(4), pages 403-430.
    50. Sniderman, Paul M. & Citrin, Jack, 1971. "Psychological Sources of Political Belief: Self-Esteem and Isolationist Attitudes," American Political Science Review, Cambridge University Press, vol. 65(2), pages 401-417, June.
    51. Christian Dustmann & Francesca Fabbri & Ian Preston, 2005. "The Impact of Immigration on the British Labour Market," Economic Journal, Royal Economic Society, vol. 115(507), pages 324-341, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nick Drydakis, 2022. "Sexual orientation discrimination in the labor market against gay men," Review of Economics of the Household, Springer, vol. 20(3), pages 1027-1058, September.
    2. Lordan, Grace & Robinson, Karina, 2020. "Inclusion in the City: setting the agenda for the first years of the Inclusion Initiative at LSE," LSE Research Online Documents on Economics 105190, London School of Economics and Political Science, LSE Library.
    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. Ali Ahmed & Mats Hammarstedt, 2020. "Ethnic discrimination in contacts with public authorities: a correspondence test among Swedish municipalities," Applied Economics Letters, Taylor & Francis Journals, vol. 27(17), pages 1391-1394, October.
    5. 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).
    6. 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.
    7. Drydakis, Nick, 2021. "Social Rejection, Family Acceptance, Economic Recession and Physical and Mental Health of Sexual Minorities," GLO Discussion Paper Series 936, Global Labor Organization (GLO).
    8. 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.
    9. Bonick, Matthew & Farfan-Vallespin, Antonio, 2018. "The Reversal of Fortune, Extractive Institution and the Historical Roots of Racism," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181569, Verein für Socialpolitik / German Economic Association.
    10. Melanie Jones & Kim Hoque & Victoria Wass & Nick Bacon, 2021. "Inequality and the Economic Cycle: Disabled Employees’ Experience of Work during the Great Recession in Britain," British Journal of Industrial Relations, London School of Economics, vol. 59(3), pages 788-815, September.
    11. Nick Drydakis, 2022. "Sexual orientation discrimination in the labor market against gay men," Review of Economics of the Household, Springer, vol. 20(3), pages 1027-1058, September.
    12. Yvonne Giesing & Maria Hofbauer, 2020. "Wie wirkt sich Covid-19 auf Migration und Integration aus?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(07), pages 41-46, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David W. Johnston & Grace Lordan, 2014. "When Work Disappears: Racial Prejudice and Recession Labour Market Penalties," CEP Discussion Papers dp1257, Centre for Economic Performance, LSE.
    2. Alper Kara & Philip Molyneux, 2017. "Household Access to Mortgages in the UK," Journal of Financial Services Research, Springer;Western Finance Association, vol. 52(3), pages 253-275, December.
    3. Joanna N. Lahey & Douglas R. Oxley, 2021. "Discrimination at the Intersection of Age, Race, and Gender: Evidence from an Eye‐Tracking Experiment," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(4), pages 1083-1119, September.
    4. Hyll, Walter & Schneider, Lutz, 2016. "Social Comparisons and Attitudes towards Foreigners. Evidence from the ‘Fall of the Iron Curtain’," IWH Discussion Papers 12/2016, Halle Institute for Economic Research (IWH).
    5. Hyll, Walter & Schneider, Lutz, 2018. "Income comparisons and attitudes towards foreigners - Evidence from a natural experiment," Journal of Comparative Economics, Elsevier, vol. 46(2), pages 634-655.
    6. Celeste K. Carruthers & Marianne H. Wanamaker, 2017. "Separate and Unequal in the Labor Market: Human Capital and the Jim Crow Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 35(3), pages 655-696.
    7. Huber, Peter & Oberdabernig, Doris A., 2016. "The impact of welfare benefits on natives' and immigrants' attitudes toward immigration," European Journal of Political Economy, Elsevier, vol. 44(C), pages 53-78.
    8. Huber, Peter & Oberdabernig, Doris A., 2016. "The impact of welfare benefits on natives' and immigrants' attitudes toward immigration," European Journal of Political Economy, Elsevier, vol. 44(C), pages 53-78.
    9. Christian Dustmann & Francesca Fabbri & Ian Preston, 2011. "Racial Harassment, Ethnic Concentration, and Economic Conditions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(3), pages 689-711, September.
    10. Paul Frijters & Michael A. Shields & Stephen Wheatley Price & Nikolaos Theodoropoulos, 2006. "Testing for Employee Discrimination in Britain using Matched Employer-Employee Data," University of Cyprus Working Papers in Economics 8-2006, University of Cyprus Department of Economics.
    11. Nick Drydakis, 2022. "Sexual orientation discrimination in the labor market against gay men," Review of Economics of the Household, Springer, vol. 20(3), pages 1027-1058, September.
    12. Doris A. Oberdabernig, 2015. "The Impact of Welfare Benefits on Natives' and Immigrants' Attitudes Towards Immigration. WWWforEurope Working Paper No. 82," WIFO Studies, WIFO, number 57890, July.
    13. Paul Frijters, 2003. "Testing for Employee Discrimination using Matched Employer-Employee Data: Theory and Evidence," Paul Frijters Discussion Papers 2003-1, School of Economics and Finance, Queensland University of Technology.
    14. Nick Drydakis, 2022. "Sexual orientation discrimination in the labor market against gay men," Review of Economics of the Household, Springer, vol. 20(3), pages 1027-1058, September.
    15. Brunner, Beatrice & Kuhn, Andreas, 2014. "Immigration, Cultural Distance and Natives' Attitudes Towards Immigrants: Evidence from Swiss Voting Results," IZA Discussion Papers 8409, Institute of Labor Economics (IZA).
    16. Bond, Timothy N. & Lehmann, Jee-Yeon K., 2018. "Prejudice and racial matches in employment," Labour Economics, Elsevier, vol. 51(C), pages 271-293.
    17. Roland G. Fryer, Jr. & Devah Pager & Jörg L. Spenkuch, 2013. "Racial Disparities in Job Finding and Offered Wages," Journal of Law and Economics, University of Chicago Press, vol. 56(3), pages 633-689.
    18. Patrick Bayer & Kerwin Kofi Charles, 2016. "Divergent Paths: Structural Change, Economic Rank, and the Evolution of Black-White Earnings Differences, 1940-2014," NBER Working Papers 22797, National Bureau of Economic Research, Inc.
    19. Laouénan, Morgane, 2014. "'Can't Get Enough': Prejudice, Contact Jobs and the Racial Wage Gap in the US," IZA Discussion Papers 8006, Institute of Labor Economics (IZA).
    20. William J. Collins & Michael Q. Moody, 2017. "Racial Differences in American Women's Labor Market Outcomes: A Long-Run View," NBER Working Papers 23397, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Prejudice; Recessions; Racism; Discrimination;
    All these keywords.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eecrev:v:84:y:2016:i:c:p:57-75. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/eer .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eer .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.