The Emergence, Persistence, and Recent Widening of the Racial Unemployment Gap

Fairlie, Robert W.; Sundstrom, William A.

doi:10.2307/2525165

Cited by 44 publications

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“…Our primary specification does not include industry controls due to the potential simultaneity of the self-employment and industry decisions. 38 The terminology for this and the following components of the decompositions follows Fairlie and Sundstrom (1999). 22 The decomposition of this expression requires first choosing a base year and base race.…”

Section: Education Migration and Other Demographic Factorsmentioning

confidence: 99%

Trends in Self-Employment Among White and Black Men: 1910-1990

Fairlie¹,

Meyer²

1999

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. Also, many states and the federal government are currently promoting self-employment as a way to leave the welfare and unemployment insurance rolls. For descriptions of these programs see Guy, Doolittle, and Fink (1991) and Raheim (1997) for the AFDC program, and U.S. Department of Labor (1992) and Benus et al. (1995) for the UI program. IntroductionThe decline in self-employment during this century is one of the major historical trends in the U.S. labor market. The fraction of white male workers who were self-employed fell from one in six in 1910 to one in ten in 1970. It is also striking that this trend stopped and reversed itself between 1970 and 1990. The self-employment rate rose from 10.0 percent in 1970 to 11.4 percent in 1990. Given the magnitude of these changes in self-employment, surprisingly very little research has documented the changes and identified their causes. Trends in black selfemployment have been studied even less, despite much recent interest in the lack of black-owned businesses and frequent conjectures about historical levels of self-employment and their causes.We use Census microdata covering most of the twentieth century to document the trends in selfemployment among both white and black men and to explore their potential causes.An examination of long-term trends in self-employment is important for several reasons.First, it has been argued that small businesses create a disproportionate share of new jobs in the economy, are an important source of innovation, and have an important effect on political decisions in the United States.1 Second, many academicians and policy makers view selfemployment as a route out of poverty and as an alternative to unemployment or potential discrimination in the labor market. 2 Third, the institutional environment in which the selfemployed work differs in important ways from that of wage/salary workers. The self-employed are not subject to the usual labor contracts and their consequent incentives, and they either do not receive, or purchase for themselves, fringe benefits provided by employers, such as health 3 See Wolpin (1977), Lazear andMoore (1984), andRettenmaier (1996). 4 See Phillips (1962) for 1929-60, Bregger (1963) for 1948-62 and updates by Ray (1975), Fain (1980 and Becker (1984), ) for 1948-82, and Aronson (1991) for 1955 The clearest statement comes from Phillips (1962, p. 1) who reports that "...the proportion of self-employed persons in the American labor force has been declining for many decades. This trend will no doubt persist in the future."6 See Bates (1987, 1989), Borjas and Bronars (1989), Meyer (1990), Fairlie (1996Fairlie ( , 1999, and Fairlie and Meyer (1996). 2 insurance and pensions. Past research has argued that the self-employed have a different return to education, will have a different age-earnings profile, and have more variability in hours worked than wage/salary workers.3 Finally, the self-employed are often singled out in the formation of public policy. They are treated differently in various aspects of the tax cod...

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Section: Education Migration and Other Demographic Factorsmentioning

confidence: 99%

Trends in Self-Employment Among White and Black Men: 1910-1990

Fairlie¹,

Meyer²

1999

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“…Such a one-to-one relationship between unemployment and employment is extremely unlikely to be true with a unit root in the participation rate. 5 Note, however, that Fairlie and Sundstrom (1999) also employ an alternative measure of joblessness.…”

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confidence: 99%

Labor-force participation rates and the informational value of unemployment rates: Evidence from disaggregated US data

Gustavsson

Österholm

2012

Economics Letters

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The informational value of the aggregate US unemployment rate has recently been questioned because of a unit root in the labor-force participation rate; the lack of mean reversion implies that long-run changes in unemployment rates are highly unlikely to reflect long-run changes in joblessness. This paper shows that this critique also extends to unemployment rates for sub-populations, such as prime-aged males.JEL Classification: C22, E24, J21

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“…A disturbing phenomenon is the comparatively slow rate of unemployment decline for these groups in recent years while the general labor market has improved. Fairlie and Sundstrom (1999) find that there has actually been a recent widening of the racial unemployment gap.…”

Section: The Economic Context Of Employment Policymentioning

confidence: 82%

Intergovernmental Relations in Employment Policy: The United States Experience

O’Leary

Straits

2000

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Policies to regulate and support labor markets in the United States have mainly been an initiative of the federal government. Historically, states and localities were reluctant to act independently to build up worker rights and protections for fear of competitively disadvantaging resident industries with added costs. Federal constitutional authority to raise revenue and control commerce among the states governed development of labor market policy in the United States. Labor market support initiatives usually have been forged in difficult economic times with contributions and compromise from the full political spectrum. This paper examines the development of employment policy in the twentieth century by viewing the interplay of federal, state, and local partners. The programs considered include unemployment insurance, training, youth programs, and the employment service. Some attention is also given to governmental policy that influences the geographic mobility of labor. Intergovernmental relations in labor market policy have resulted in a system that performs a wide variety of functions, varies greatly at the local and state levels, but maintains important federal standards nationwide.

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The Emergence, Persistence, and Recent Widening of the Racial Unemployment Gap

Cited by 44 publications

References 0 publications

Trends in Self-Employment Among White and Black Men: 1910-1990

Trends in Self-Employment Among White and Black Men: 1910-1990

Labor-force participation rates and the informational value of unemployment rates: Evidence from disaggregated US data

Intergovernmental Relations in Employment Policy: The United States Experience

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