Investigating Racial Inequality through Historical Data and Events
Paper Session
Sunday, Jan. 4, 2026 2:30 PM - 4:30 PM (EST)
- Chair: Vicki Bogan, Duke University
Market Forces and Employer Racial Preferences: Evidence from Wartime Shortages
Abstract
This paper estimates the extent to which labor market tightness reduces employer racial preferences, a key prediction of canonical theories of discrimination. Using newly constructed data on 16.8 million historical job advertisements spanning 1900-1970 and 10 million newly digitized WWII draft registration cards, we exploit quasi-experimental variation from World War II draft rates across local labor markets as a shock to White labor supply. Higher draft rates significantly reduced White-preferred job advertisements by 1.1 percentage points per 10 percentage point increase in draft intensity, with effects persisting 15 years post-war. The draft shock enabled Black workers to access better-paying occupations relative to White workers by 1950, primarily through exit from agriculture and educational investment. White workers experienced a 29 percent wage decline while Black workers gained 24 percent despite increased Black labor supply, consistent with durable employer demand shifts rather than labor supply effects alone.Innovation in Times of Turmoil: The Economic Consequences of Social Movement
Abstract
Firms’ innovation strategies and investment decisions can be shaped by broader societal dynamics, including the emergence of large-scale protest movements. We study how U.S. racial justice demonstrations—particularly those gaining national prominence in the mid-2010s—affected firm behavior in sectors tied to the criminal legal system. Using a difference-in-differences design, we compare firms with connections to the legal system to otherwise similar firms within the same industry, before and after the onset of protest activity. We find that exposure led to an increase in venture investment, with effects concentrated in relatively smaller deals (under $1 million) and no observable impact on larger deals exceeding $20 million. We also document a rise in innovation output. These findings suggest that public mobilization around issues of justice and equity can influence firm strategy, reshaping capital allocation and innovation in politically salient sectors.Intergenerational Race-Based Trauma and Financial Market Participation
Abstract
Both theory and empirical research have shown that market frictions and behavioral biases account, in part, for lower than expected household stock market participation rates. However, research has identified only a limited number of factors affecting variation in household stock market participation. This paper examines the hypothesis that historical race-based trauma can influence current household financial market participation. Using restricted use Panel Study of Income Dynamics (PSID) data, we show exposure to historical race-based financial trauma is related to decreased stock market participation that cannot be explained by historical region-based racial exclusion. This has profound implications for wealth accumulation and the persistence of racial wealth inequality.Discussant(s)
Munir Squires
,
University of British Columbia
Suresh Naidu
,
Columbia University
Claire Celerier
,
University of Toronto
Naomi Zewde
,
University of California-Los Angeles
JEL Classifications
- N3 - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
- J1 - Demographic Economics