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Discrimination and Racial Disparities in Labor Market Outcomes: Evidence from WWII

Author

Listed:
  • Anna Aizer
  • Ryan Boone
  • Adriana Lleras-Muney
  • Jonathan Vogel

Abstract

The 1940s witnessed substantial reductions in the Black-white earnings gap. We study the role that domestic WWII defense production played in reducing this gap. Exploiting variation across labor markets in the allocation of war contracts to private firms, we find that war production contracts resulted in significant increases in the earnings of Black workers and declines in the racial wage gap, with no effect on white workers. This was achieved via occupational upgrading among Black men to skilled occupations. The gains largely persisted through at least 1970. Using a structural model, we show that declines in discrimination (and not migration or changes in productivity) account for all of the occupational upgrading and half of the estimated wage gains associated with the war production effort. Additionally, the war production effort explains one quarter (one seventh) of the overall improvements in racial gaps in occupation allocations (wages) witnessed over this decade. Finally, war spending led to an increase in the high school graduation rate of Black children, suggesting important intergenerational spillovers associated with declines in labor market discrimination.

Suggested Citation

  • Anna Aizer & Ryan Boone & Adriana Lleras-Muney & Jonathan Vogel, 2020. "Discrimination and Racial Disparities in Labor Market Outcomes: Evidence from WWII," NBER Working Papers 27689, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27689
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    References listed on IDEAS

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    1. Jaworski, Taylor, 2017. "World War II and the Industrialization of the American South," The Journal of Economic History, Cambridge University Press, vol. 77(4), pages 1048-1082, December.
    2. Maloney, Thomas N., 1994. "Wage Compression and Wage Inequality Between Black and White Males in the United States, 1940–1960," The Journal of Economic History, Cambridge University Press, vol. 54(2), pages 358-381, June.
    3. Wilson, Charles A, 1980. "On the General Structure of Ricardian Models with a Continuum of Goods: Applications to Growth, Tariff Theory, and Technical Change," Econometrica, Econometric Society, vol. 48(7), pages 1675-1702, November.
    4. David Schindler & Mark Westcott, 2017. "Shocking Racial Attitudes: Black G.I.s in Europe," CESifo Working Paper Series 6723, CESifo.
    5. Fishback, Price, 1984. "Segregation in Job Hierarchies: West Virginia Coal Mining, 1906–1932," The Journal of Economic History, Cambridge University Press, vol. 44(3), pages 755-774, September.
    6. Sundstrom, William A., 1994. "The Color Line: Racial Norms and Discrimination in Urban Labor Markets, 1910–1950," The Journal of Economic History, Cambridge University Press, vol. 54(2), pages 382-396, June.
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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation

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