Historical perspectives on racial economic differences: a summary of recent research.

• Author: Margo, Robert A.
• Position: Research Summaries

Few public policy debates in the United States are as contentious or as long lasting as those arising from racial economic differences. Historical perspective is essential to these debates because history casts a long shadow--what happened in the past, even the distant past, can affect economic behavior today--and because race is central to so much of the political, social, and economic history of the United States. Race, as the Nobel Prizewinning economist Gunnar Myrdal put it, is the "American dilemma."

Much of the research that I have conducted while associated with the NBER has focused on racial economic differences. For example, my book Race and Schooling in the South, 1880-1950: An Economic History is an extended analysis of the economics of segregated schools in the South prior to the Supreme Court's famous decision in Brown v. Board of Education whose 50-year anniversary is celebrated this year. (1) In this summary I briefly discuss my recent work on racial differences, most of which has been conducted jointly with NBER Research Associate William J. Collins, my colleague at Vanderbilt University.

Racial Differences in Schooling

In the United States today black children lag behind their white counterparts in most dimensions of schooling. These gaps have been attributed variously to racial differences in the quality of schooling, family background, neighborhood and other environmental factors, and to cultural biases in testing procedures. Economically, the schooling gaps matter because the American labor market rewards schooling, and these rewards have grown larger over time.

Collins and I (2) attempt to provide some historical perspective on contemporary racial differences in schooling. Our work draws heavily on recently available public use samples of various federal censuses, as well as on other public documents. We interpret the evidence in an "analytic narrative" that is based conceptually on a simple model of optimal investment in schooling. The narrative has three principal themes. First, in all the dimensions that the data address, the long-term pattern is one of substantial racial convergence. Second, convergence is not a recent phenomenon; it began long before the Civil Rights Revolution of the 1960s. Third, the South is central to the narrative because, historically, most blacks lived in the South and the educational conditions in the South lagged substantially behind other regions for both races. Our paper considers a variety of schooling indicators in depth, but the data on illiteracy and school attendance serve to illustrate the major themes. In 1870, the first year for which national data by race were reported, the aggregate racial gap in literacy rates was an astounding 68 percentage points. The gap was so high because the vast majority of blacks at the time were former slaves or their offspring, and literacy was extremely difficult to acquire under slavery. Of the many "treatment effects" of the Civil War, the establishment of schools for black children in the South in the aftermath of the War was perhaps one of the most important, for it enabled successive generations of black children to become literate. Although literacy per se did not require much exposure to formal schooling, the returns to literacy, measured in terms of occupational status (a proxy for income) were quite substantial for blacks--even in the South, where racial oppression and segregation were the norm. There is also some evidence of "pure catch-up," a willingness on the part of black parents to have their children invest in schooling beyond what would have been predicted given the historical circumstances. To be sure, the convergence was not always continuous, especially around the turn of the century when most adult blacks in the South were disenfranchised at the local and state level. However, private philanthropy took up some of the slack as did (later in the century) court action, social activism, and finally, government intervention.

Racial Differences in Housing

Although economic historians and labor economists have long been interested in the historical...