Valuing Race
The Economic Effects of American Slavery: Tests at the Border
Hoyt Bleakley & Paul Rhode
NBER Working Paper, June 2024
Abstract:
To engage with the large literature on the economic effects of slavery, we use antebellum census data to test for statistical differences at the 1860 free-slave border. We find evidence of lower population density, less intensive land use, and lower farm values on the slave side. Half of the border region was half underutilized. This does not support the view that abolition was a costly constraint for landowners. Indeed, the lower demand for similar, yet cheaper, land presents a different puzzle: why wouldn't the yeomen farmers cross the border to fill up empty land in slave states, as was happening in the free states of the Old Northwest? On this point, we find evidence of higher wages on the slave side, indicating an aversion of free labor to working in a slave society. This evidence of systemically lower economic performance in slavery-legal areas suggests that the earlier literature on the profitability of plantations was misplaced, or at least incomplete.
Chinese exclusion? Agent response in the market for owner-occupied housing
Andrew Hanson & Zackary Hawley
Real Estate Economics, forthcoming
Abstract:
We design and implement a correspondence experiment to test for differences in real estate agent response to Chinese clients. In the full sample, real estate agents are no more likely to respond to white clients than Chinese clients. Subsample results show statistically significant differential treatment of Chinese clients in rural areas and in some states. White real estate agents favor white clients (7.90% higher response rate), and Chinese real estate agents favor Chinese clients by a wide margin (151.11% higher response rate).
Her Property Transactions: White Women and the Frequency of Female Ownership in the Antebellum Era
Benton Wishart & Trevon Logan
NBER Working Paper, May 2024
Abstract:
The traditional historical narrative claims that White women were rarely involved in market transactions for enslaved people in the antebellum United States. Using transaction records, notary statements, and runaway advertisements, we provide the first quantitative estimates of the extent of White women’s involvement in antebellum slave transactions as owners of record. Contrary to the narrative, we find that White women were quite frequently noted as owners of record in transactions as both buyers and sellers. White women participated in more than 30% of the transactions in the largest market for enslaved people in the antebellum era. We also find that White women were especially likely to be owners involved in transactions with enslaved women, where they were listed as owners in nearly 40% of transactions. Linking transaction participants to the census, we find that White women owners were not more likely to be widows nor were they older than women in the general population. Overall, our results are consistent with the new historical narrative that White women were ubiquitous in enslavement transactions and this was a critical part of White women’s economic activity in the antebellum era.
Racial disparities in debt collection
Jessica LaVoice & Domonkos Vamossy
Journal of Banking & Finance, July 2024
Abstract:
This paper documents that Black and Hispanic borrowers are 52% more likely to experience a debt collection judgment compared to their counterparts, controlling for socioeconomic variables including income, credit scores, delinquent debt balances, and other relevant credit characteristics. Statistical discrimination mechanisms such as spatially targeting collection efforts based on the likelihood that an attorney represents the defendant or that the defendant will contest the debt in court do not explain the racial gap in judgments. We find support that the judgment gap is partially driven by taste-based discrimination, as evidenced by minorities having less 90-day past due debt balances than non-minority borrowers when controlling for model covariates. Furthermore, the disparity primarily affects non-delinquent borrowers, indicating higher levels of creditor discretion in initiating judgment proceedings. A back-of-the-envelope calculation suggests that the racial wealth gap explains at most 48% of the racial disparity in judgments.
Ethno-Racial and Credit Worthiness Disparities in Access to Mortgage Credit
José Loya
Social Forces, forthcoming
Abstract:
The mortgage industry is central to ethno-racial stratification in homeownership access. Ample research demonstrates that unequal treatment of minorities has created major differences in the access and exclusion of low-cost loan products in the housing market. While numerous studies have documented the disadvantages Black and Latino homebuyers face, these studies have been limited in their assessment of credit worthiness in accessing a mortgage. This study draws on the annual dataset from the Home Mortgage Disclosure Act from 2018 and 2019 to assess ethno-racial disparities in mortgage outcomes by debt-to-income (DTI) levels. I demonstrate that DTI levels vary tremendously by ethno-racial groups. In addition, I show that loan rejections and high-cost loan originations are highest among Blacks and Latinos across DTI levels compared to White applicants. Depending on the adverse loan outcome, Asians perform similarly or slightly underperform compared to Whites. These trends are particularly true when examining high-cost loan originations as Blacks and Latinos with excellent credit worthiness perform similarly as Whites and Asians with below-average credit worthiness. Implications for ethno-racial stratification are discussed.
Discrimination in the payments chain
Anna Costello, Michael Minnis & Irina Rabinovich
Journal of Financial Economics, August 2024
Abstract:
We examine whether discrimination affects customers’ willingness to pay their suppliers. Using a dataset of detailed trade credit networks, we find that when facing a macroeconomic shock, customers delay payments to their suppliers with female or black trade credit officers at a 10%–20% higher rate relative to their payments to non-minorities. These results hold after controlling for a host of economic differences between minority groups and non-minority groups. In particular, we exploit the complexity of the supply chain network -- wherein suppliers transact with multiple customers in each month and customers transact with multiple suppliers in each month -- to estimate within-relationship changes in payment behavior during periods of financial hardship. Results indicate that the largest increases in payment delays are between customers that are classified as having racial or gender biases and suppliers that have minority lead credit officers. The results suggest that biased beliefs and preferences play a critical role in trade credit.
Public opinion, racial bias and labour market outcomes in the USA
Kaveh Majlesi, Silvia Prina & Paul Sullivan
Nature Human Behaviour, forthcoming
Abstract:
Here we study the role of negative shifts in public opinion in the economic lives of under-represented racial groups by investigating sudden changes in views towards Asian people following the anti-Chinese rhetoric that emerged with the COVID-19 pandemic, and associated changes in employment status and earnings in the US labour market. Using data from the Current Population Survey, we find that, unlike other under-represented groups, Asian workers in occupations or industries with a higher likelihood of face-to-face interactions before the pandemic were more likely to become unemployed afterwards. While widespread along the political spectrum, negative shifts in the perceived favourability of Asian people, and not of other under-represented groups, were much stronger among those who voted for Donald Trump in 2016 and could have been more influenced by the anti-Asian rhetoric.
School Equalization in the Shadow of Jim Crow: Causes and Consequences of Resource Disparity in Mississippi circa 1940
David Card et al.
NBER Working Paper, May 2024
Abstract:
A school finance equalization program established in Mississippi in 1920 failed to help many of the state's Black students – an outcome that was typical in the segregated U.S. South (Horace Mann Bond, 1934). In majority-Black school districts, local decision-makers overwhelmingly favored white schools when allotting funds from the state's preexisting per capita fund, and the resulting high expenditures on white students rendered these districts ineligible for the equalization program. Thus, while Black students residing in majority-white districts benefited from increased spending and standards for Black schools, those in majority-Black districts continued to experience extremely low -- and even worsening -- school funding. We model the processes that led the so-called equalization policy to create disparities in schooling resources for Black students, and estimate effects on Black children using both a neighboring-counties design and an IV strategy. We find that local educational spending had large impacts on Black enrollment rates, as reported in the 1940 census, with Black educational attainment increasing in marginal spending. Finally, we link the 1940 and 2000 censuses to show that Black children exposed to higher levels of school expenditures had significantly more completed schooling and higher income late in life.