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

Author

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  • Kenneth A. Couch

    (University of Connecticut)

  • Robert Fairlie

    (University of California, Santa Cruz)

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 examines labor market transitions for prime age males to test this 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 are initially hired from the ranks of the unemployed early in the business cycle and later are drawn from non-participation. 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. There is also evidence that residual differences in the racial unemployment gap vary systematically over the business cycle in a manner consistent with discrimination being more evident in the economy at times when its cost is lower.

Suggested Citation

  • Kenneth A. Couch & Robert Fairlie, 2005. "Last Hired, First Fired? Black-White Unemployment and the Business Cycle," Working papers 2005-50, University of Connecticut, Department of Economics.
  • Handle: RePEc:uct:uconnp:2005-50 Note: We thank David Card and seminar participants at the University of Connecticut, the Federal Reserve Bank of San Francisco, the 2005 Society of Labor Economists Meetings, and Wesleyan University for helpful comments. Daniel Beltran and Oded Gurantz provided excellent research assistance.
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    References listed on IDEAS

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    Cited by:

    1. Kenneth A. Couch & Robert W. Fairlie & Huanan Xu, 2016. "Racial Differences in Labor Market Transitions and the Great Recession," CESifo Working Paper Series 5772, CESifo Group Munich.
    2. Julie L. Hotchkiss & M. Melinda Pitts, 2007. "Evidence of demand factors in the determination of the labor market intermittency penalty," FRB Atlanta Working Paper 2007-16, Federal Reserve Bank of Atlanta.
    3. Romain Aeberhardt & Élise Coudin & Roland Rathelot, 2017. "The heterogeneity of ethnic employment gaps," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(1), pages 307-337, January.
    4. Brian Thiede & Shannon Monnat, 2016. "The Great Recession and America’s geography of unemployment," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 35(30), pages 891-928, September.
    5. Wido Geis, 2010. "High Unemployment in Germany: Why do Foreigners Suffer Most?," ifo Working Paper Series 90, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    6. Maré, David C & Fabling, Richard, 2013. "The incidence and persistence of cyclical job loss in New Zealand," Working Papers 13_08, Motu Economic and Public Policy Research.
    7. Xu, Xin, 2013. "The business cycle and health behaviors," Social Science & Medicine, Elsevier, pages 126-136.
    8. Siddiqi, Arjumand & Jones, Marcella K. & Bruce, Donald J. & Erwin, Paul C., 2016. "Do racial inequities in infant mortality correspond to variations in societal conditions? A study of state-level income inequality in the U.S., 1992–2007," Social Science & Medicine, Elsevier, pages 49-58.
    9. Bhattacharyya, Aditi & Pattanaik, Prasanta K. & Xu, Yongsheng, 2011. "Choice, Internal Consistency And Rationality," Economics and Philosophy, Cambridge University Press, pages 123-149.
    10. Peter Kuhn & Kailing Shen, 2009. "Employers' Preferences for Gender, Age, Height and Beauty: Direct Evidence," NBER Working Papers 15564, National Bureau of Economic Research, Inc.
    11. Donald Freeman, 2012. "On (Not) Closing the Gaps: The Evolution of National and Regional Unemployment Rates by Race and Ethnicity," The Review of Black Political Economy, Springer;National Economic Association, pages 267-284.
    12. John M. Nunley & Adam Pugh & Nicholas Romero & Richard Alan Seals, Jr., 2014. "An Examination of Racial Discrimination in the Labor Market for Recent College Graduates: Estimates from the Field," Auburn Economics Working Paper Series auwp2014-06, Department of Economics, Auburn University.

    More about this item

    Keywords

    unemployment; race; business cycle; discrimination;

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J7 - Labor and Demographic Economics - - Labor Discrimination

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