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

Anna Aizer, Ryan Boone, Adriana Lleras-Muney and Jonathan Vogel

No 27689, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: J24 J3 J7 N12 N4 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-dem, nep-his, nep-lma and nep-ure
Note: CH DAE ITI LS PR
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Citations: View citations in EconPapers (10)

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