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Bank deregulation and racial inequality in America

Ross Levine (), Alexey Levkov and Yona Rubinstein

No RPA 12-5, Supervisory Research and Analysis Working Papers from Federal Reserve Bank of Boston

Abstract: We use the cross-state, cross-time variation in bank deregulation across the U.S. states to assess how improvements in banking systems affected the labor market opportunities of black workers. Bank deregulation from the 1970s through the 1990s improved bank efficiency, lowered entry barriers facing nonfinancial firms, and intensified competition for labor throughout the economy. Consistent with Becker’s (1957) seminal theory of racial discrimination, we find that deregulation-induced improvements in the banking system boosted blacks’relative wages by facilitating the entry of new firms and reducing the manifestation of racial prejudices in labor markets.

Keywords: Banks and banking; Labor market; Wages; Bank competition (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cba and nep-his
Date: 2012
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Journal Article: Bank Deregulation and Racial Inequality in America (2014) Downloads
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