The Costs of Employment Segregation: Evidence from the Federal Government Under Woodrow Wilson

76 Pages Posted: 11 Sep 2020 Last revised: 16 Dec 2021

See all articles by Abhay Aneja

Abhay Aneja

Stanford University; University of California, Berkeley - Haas School of Business

Guo Xu

University of California, Berkeley - Haas School of Business

Date Written: September 2020

Abstract

We link newly-digitized personnel records of the U.S. government for 1907-1921 to census data to study the segregation of the civil service by race under President Woodrow Wilson. Using a difference-in-differences design around Wilson’s inauguration, we find that the introduction of employment segregation increased the black-white earnings gap by 3.4-6.9 percentage points. This increasing gap is driven by a reallocation of existing black civil servants to lower-paid positions, lowering their returns to education. Importantly, the negative effects extend beyond Wilson’s presidency. Using census data for 1900-1940, we show that segregation caused a relative decline in the home ownership rate of black civil servants. Moreover, by comparing children of black and white civil servants in adulthood, we provide evidence that descendants of black civil servants who were exposed to Wilson’s presidency exhibit lower levels of education, earnings, and social mobility. Our combined results thus document significant short and long-run costs borne by minorities during a unique episode of state-sanctioned discrimination.

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Suggested Citation

Aneja, Abhay and Xu, Guo, The Costs of Employment Segregation: Evidence from the Federal Government Under Woodrow Wilson (September 2020). NBER Working Paper No. w27798, Available at SSRN: https://ssrn.com/abstract=3687954

Abhay Aneja (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

Guo Xu

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

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