Macroeconomic shocks and racial labor market differences

Kuhelika De; Ryan A. Compton; Daniel C. Giedeman; Gary A. Hoover

doi:10.1002/soej.12534

journal article Sep 12, 2021

Macroeconomic shocks and racial labor market differences

Kuhelika De Ryan A. Compton Daniel C. Giedeman Gary A. Hoover

Southern Economic Journal Vol. 88 No. 2 pp. 680-704 · Wiley

View at Publisher Save 10.1002/soej.12534

Abstract

AbstractWe investigate the effects of three structural macroeconomic shocks (monetary, demand, and supply) on the labor market outcomes of black and white Americans using a factor‐augmented vector autoregression (FAVAR) framework with 136 U.S. macroeconomic indicators from 1973 to 2017. Our results indicate that adverse macroeconomic shocks have differential effects on labor market outcomes for blacks and whites, hurting blacks disproportionately more than whites. Black Americans' labor market outcomes appear to be significantly more sensitive to macroeconomic shocks than are the outcomes for white Americans. Our findings indicate that business‐cycle costs are disproportionately borne by black Americans and that racial inequality in the labor market rises in recessions. The strongest effects occur in recessions caused by supply side disturbances. Our results suggest policymakers should take these heterogeneous effects into account when designing policy.

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Details

Published: Sep 12, 2021
Vol/Issue: 88(2)
Pages: 680-704
License: View

Authors

K

Kuhelika De

Department of Economics Grand Valley State University Grand Rapids Michigan USA

R

Ryan A. Compton

Department of Economics and Econometrics University of Manitoba Winnipeg Manitoba Canada

D

Daniel C. Giedeman

Department of Economics Grand Valley State University Grand Rapids Michigan USA

G

Gary A. Hoover

Department of Economics and Executive Director of the Murphy Institute Tulane University New Orleans Louisiana USA

Cite This Article

Kuhelika De, Ryan A. Compton, Daniel C. Giedeman, et al. (2021). Macroeconomic shocks and racial labor market differences. Southern Economic Journal, 88(2), 680-704. https://doi.org/10.1002/soej.12534

Macroeconomic shocks and racial labor market differences

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