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Racial Gaps in Labor Market Outcomes in the Last Four Decades and over the Business Cycle

Tomaz Cajner, Tyler Radler, David Ratner and Ivan Vidangos

No 2017-071, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We examine racial disparities in key labor market outcomes for men and women over the past four decades, with a special emphasis on their evolution over the business cycle. Blacks have substantially higher and more cyclical unemployment rates than whites, and observable characteristics can explain very little of this differential, which is importantly driven by a comparatively higher risk of job loss. In contrast, the Hispanic-white unemployment rate gap is comparatively small and is largely explained by lower educational attainment of (mostly foreign-born) Hispanics. Regarding labor force participation, the remarkably low participation rate of black men is largely unexplained by observables, is mostly driven by high labor force exit rates from employment, and has shown little improvement over the last 40 years. Furthermore, even among those who work, blacks and Hispanics are more likely than whites to work part-time schedules despite wanting to work additional hour s, and the racial gaps in this involuntary part-time employment are large even after controlling for observable characteristics. Our findings also suggest that the robust recovery of the labor market in the last few years has contributed significantly to reducing the gaps that had widened dramatically as a result of the Great Recession; however, the disparities remain substantial.

Keywords: Business Cycle; Discrimination; Inequality; Labor Force Participation; Racial Disparities; Unemployment (search for similar items in EconPapers)
JEL-codes: J00 J15 J16 J64 J7 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-ure
Date: 2017-06-30
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