This paper analyzes white attitudes towards African Americans in the United States at different points in a business cycle from 1979- 2014.
What happens to racial prejudice during economic downturns? This paper analyzes white attitudes towards African Americans in the United States at different points in a business cycle from 1979- 2014. Using a number of indicators of hostility towards African Americans available from the General Social Survey we develop an indicator of racial prejudice. We combine this with data on unemployment from the Current Population Survey and find robust evidence that racial hostility as measured by our indicator of prejudice is counter cyclical and rises during periods of higher unemployment for whites. Specifically a one standard deviation in the unemployment rate being experienced by whites is associated with a .03 to.05 standard deviation increase in the discrimination index. This is of a magnitude comparable with one year less of education. We undertake a quantile regression to show that this effect is widespread across the distribution of prejudice and that apart from those with initially low levels of prejudice, increasing own group unemployment results in statistically significant increases of similar magnitude in prejudice across that distribution. Finally, we show that discrimination is robustly positive correlated with measures of life dissatisfaction, further underscoring the significance of periods of distress in generating racial hostility.
