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

Kenneth Couch and Robert Fairlie

No 2005-50, Working papers from University of Connecticut, Department of Economics

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.

Keywords: unemployment; race; business cycle; discrimination (search for similar items in EconPapers)
JEL-codes: J1 J6 J7 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2005-11
New Economics Papers: this item is included in nep-lab
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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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Last hired, first fired? black-white unemployment and the business cycle (2010)
Working Paper: Last Hired, First Fired? Black-White Unemployment and the Business Cycle (2008)
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