Santa Clara University - Leavey School of Business - Economics Department
Journal of Economic History, Vol. 67, June 2007
Prior to the modern civil rights movement of the 1960s, the pay gap between African-American and white workers in the South was large overall, but also quite variable across location. Using 1940 census data, I estimate the white-black earnings gap of men for separate county groups called state economic areas, adjusting for individual differences in schooling and experience. I show that the gap was significantly greater in areas where, ceteris paribus, blacks were a larger proportion of the workforce, plantation institutions were more prevalent, more of the population was urban, and white voters exhibited segregationist preferences. These results are consistent with descriptive evidence that discrimination in southern labor markets operated through discrimination in job assignments, which prevented black workers from acquiring skills and also depressed their wages through a crowding effect. They also affirm the enduring impact of slavery on the economic prospects of southern blacks: the proportion slave in 1860 is a powerful predictor of the racial wage gap in 1940.