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Persistent Advantage or Disadvantage?: Evidence in Support of the Intergenerational Drag Hypothesis - Statistical Data Included
American Journal of Economics and Sociology, The, April, 2001 by William Darity Jr., Jason Dietrich, David K. Guilkey
DAVID K. GUILKEY [*]
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ABSTRACT. By utilizing the Integrated Public Use Microdata Series (IPUMS) and a measure of occupational prestige (OCCSCORE) as a labor market outcome, the authors examine variations in the degree of labor market discrimination faced by several ethnic and racial groups in the United States between 1880 and 1990. Results demonstrate that the sharpest decline in labor market discrimination against blacks occurred between 1960 and 1980. For black males the extent of labor market discrimination was greater in all census years in IPUMS after 1880 until 1970, evidence contradicting the conventional expectation that market-based discrimination will decline progressively over time by dint of competitive pressure. Finally, after replicating George Borjas' "ethnic capital" exercise, the authors pool the 1880, 1900, and 1910 data to determine the relative magnitude of a group's gains and losses in occupational prestige due to group advantage or disadvantage in human capital endowments and due to favorable or unfavorable treatment (nepotism or discrimination) of those endowments in the labor market. The authors then examine statistically whether the group human capital advantage or disadvantage and group exposure to nepotism or discrimination at the turn of the century affects labor market outcomes for their descendants today. Results indicate strong effects of the past on present labor market outcomes. Hence, the essence of the study is the statistical demonstration that there are significant and detectable effects on current generations of the labor market experiences of their racial/ethnic ancestors.
Introduction: The Intergenerational Drag Hypothesis
THE AVAILABILITY of the Integrated Public Use Microdata Series (IPUMS) (Ruggles, et. al. 1995) enables comparison of evidence from the United States decennial censuses on economic outcomes for numerous ethnic or racial groups across the span of a-century. This, in turn, makes it possible to examine secular changes in the degree of discriminatory disadvantage or nepotistic advantage experienced by particular groups over time. Moreover, access to IPUMS facilitates assessment of the long-term effects of ethnic or racial group affiliation on the contemporary economic performance of members of each group. We now can assess whether a specific ethnic or racial group leaves a generous or a bitter legacy for its descendants.
Four recent studies by economists with substantial historical content have addressed the potential relationship between discrimination and labor market outcomes for blacks. Placing discrimination offstage, Smith and Welch (1989) have emphasized migration, market expansion, and especially variations in school quality as central to explaining racial differences in earnings since the 1940s. Robert Margo's (1990) study of the history of schooling in the US South under the dual system between 1880 and 1950 shares the Smith and Welch emphasis on school quality.
Unlike Smith and Welch, Margo dates the relative improvement in black schooling from the 1930s, rather than the 1910s. Furthermore, Margo adds what he terms an "intergenerational drag" effect to the mix:
Even if the equal part of the separate-but-equal doctrine had been enforced in the southern public schools, the educational achievement of black children would have lagged behind white children, because of "family background" effects. Poverty and high rates of adult illiteracy, as much as the poor quality of the schools, kept black children out of the classroom. These family background effects, in turn, can be partly traced to educational backwardness in the nineteenth century and ultimately to slavery. (Margo 1990, p. 4)
However, Margo does not consider the potential "intergenerational drag" effects associated with the exposure of black parents to labor market discrimination and any consequent transmission of this disadvantage to their children. Moreover, given the designated time frame of his study, Margo necessarily does not carry his investigation into the second half of the 20th century.
In contrast, Heckman and coauthors (Heckman 1997, Donohue and Heckman 1991, and Heckman and Payner 1989) have argued that evidence from the US South, particularly South Carolina, indicates that labor market discrimination played an important role in dictating black economic outcomes until passage of the Civil Rights Act of 1964. The Civil Rights Act, according to Heckman (1997, p. 406) ended not only racist laws enacted by individual states but, more important, broke clown the "[i]nformally enforced codes and private practices . . . [that] kept segregation in place." It required federal legislation to root out the "informally enforced codes and private practices"; market forces had not, in their natural course, removed or overcome these "codes and private practices." Profit motivated behavior by employers was not sufficient to mitigate the labor market effects of Jim Crow arrangements in the south nor the operation of prejudice in northern labor markets. Thus, Heckman's research suggests that the sharpest de clines in measurable discrimination in employment should be apparent in the decade immediately following passage of the Civil Rights Act of 1964, the decade 1965-1975.
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