Persistent Advantage or Disadvantage?: Evidence in Support of the Intergenerational Drag Hypothesis

Abstract

By utilizing the Integrated Public Use Microdata Series (IPUMS) and a measure of occupational prestige (OCCSCORE) as a labor market outcome, the authors examine variations in the degree of labor market discrimination faced by several ethnic and racial groups in the United States between 1880 and 1990. Results demonstrate that the sharpest decline in labor market discrimination against blacks occurred between 1960 and 1980. For black males the extent of labor market discrimination was greater in all census years in IPUMS after 1880 until 1970, evidence contradicting the conventional expectation that market‐based discrimination will decline progressively over time by dint of competitive pressure. Finally, after replicating George Borjas' “ethnic capital” exercise, the authors pool the 1880, 1900, and 1910 data to determine the relative magnitude of a group's gains and losses in occupational prestige due to group advantage or disadvantage in human capital endowments and due to favorable or unfavorable treatment (nepotism or discrimination) of those endowments in the labor market. The authors then examine statistically whether the group human capital advantage or disadvantage and group exposure to nepotism or discrimination at the turn of the century affects labor market outcomes for their descendants today. Results indicate strong effects of the past on present labor market outcomes. Hence, the essence of the study is the statistical demonstration that there are significant and detectable effects on current generations of the labor market experiences of their racial/ethnic ancestors.