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When work disappears: racial prejudice and recession labour market penalties

Johnston, David W. and Lordan, Grace (2014) When work disappears: racial prejudice and recession labour market penalties. CEP Discussion Papers, CEPDP 1257. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: CEPDP 1257

Abstract

This paper assesses whether racial prejudice and labour market discrimination is counter-cyclical. This may occur if prejudice and discrimination are partly driven by competition over scarce resources, which intensifies during periods of economic downturn. Using British Attitudes Data spanning three decades, we find that prejudice does increase with unemployment rates. We find greater countercyclical effects for highly-educated, middle-aged, full-time employed men. For this group, a 1%-point increase in unemployment raises self-reported racial prejudice by 4.1%-points. This result suggests that non-White workers are more likely to encounter racially prejudiced employers and managers in times of higher unemployment. Consistent with the estimated attitude changes, we find using the British Labour Force Survey that racial employment and wage gaps increase with unemployment. The effects for both employment and wages are largest for high-skill Black workers. For example, a 1%-point increase in unemployment increases Black-White employment and wage gaps for the highly educated by 1.3%-points and 2.5%. Together, the attitude and labour market results imply that non-Whites disproportionately suffer during recessions. It follows that recessions exacerbate existing racial inequalities.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 2014 The Authors
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HT Communities. Classes. Races
H Social Sciences > HV Social pathology. Social and public welfare. Criminology
Sets: Departments > Social Policy
Research centres and groups > Centre for Economic Performance (CEP)
Research centres and groups > LSE Health
Series: Working Papers > CEP Discussion Papers
Date Deposited: 17 Mar 2014 12:02
Last Modified: 17 Mar 2014 12:02
URI: http://eprints.lse.ac.uk/id/eprint/56110

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