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Racial prejudice and labour market penalties during economic downturns

Johnston, David W. and Lordan, Grace (2016) Racial prejudice and labour market penalties during economic downturns. European Economic Review, 84. pp. 57-75. ISSN 0014-2921

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Identification Number: 10.1016/j.euroecorev.2015.07.011

Abstract

Do economic downturns encourage racist attitudes? Does this in-turn lead to worse labour market outcome for minorities? We assess these important questions using British attitude and labour force data. The attitude data show that racial prejudice is countercyclical, with the effect driven by large increases for high-skilled middle-aged working men – a 1%-point increase in unemployment is estimated to increase self-reported racial prejudice by 4%-points. Correspondingly, the labour force data show that racial employment and wage gaps are counter-cyclical, with the largest effects also observed for high-skilled men, especially in the manufacturing and construction industries – a 1%-point increase in unemployment is estimated to increase the wage gap by 3%. These results are entirely consistent with the theoretical literature, which proposes that racial prejudice and discrimination are the result of labour market competition among individuals with similar traits, and that the effects of this competition are exacerbated during periods of economic downturn.

Item Type: Article
Official URL: http://www.sciencedirect.com/science/journal/00142...
Additional Information: © 2015 Elsevier B.V.
Divisions: Social Policy
LSE Health
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HT Communities. Classes. Races
JEL classification: J - Labor and Demographic Economics > J0 - General > J01 - Labor Economics: General
J - Labor and Demographic Economics > J7 - Labor Discrimination > J70 - General
J - Labor and Demographic Economics > J7 - Labor Discrimination > J71 - Discrimination
Sets: Departments > Social Policy
Research centres and groups > LSE Health
Date Deposited: 17 Sep 2015 14:37
Last Modified: 19 Nov 2019 12:18
URI: http://eprints.lse.ac.uk/id/eprint/63622

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