The 1940s witnessed substantial reductions in the Black-white earnings gap. The authors 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, they 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, the authors 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.

Date

30.09.2020 | 15:00 - 16:00

Event Location

Online via ZOOM


Department
  • Social Policy and Redistribution
Category
Keywords

Contact

Head and Dean of Graduate Studies