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The labor market effects of sex and race discrimination laws (Neumark & Stock 2006)

Citation

Neumark, D., & Stock, W. (2006). The labor market effects of sex and race discrimination laws. Economic Inquiry, 44(3), 385-419.

Highlights

  • The study’s objective was to examine the effect of state-level sex and race discrimination laws passed before 1960 on employment and earnings outcomes for women and African Americans.
  • The authors used a triple difference estimator including state, year, and subgroup variables. The primary data source was U.S. Census data from 1940 to 1960.
  • The study found that sex-related equal pay laws had negative, statistically significant effects on women’s employment relative to men and a growing positive effect on women’s earnings relative to men over time. Racial discrimination laws had no significant immediate effects on employment or earnings for African American men compared with white men in the short term, but there were positive effects after the laws were in effect for a number of years.
  • The quality of causal evidence presented in this report is low. This means we are not confident that the estimated effects were attributable to the state sex and race discrimination laws; other factors are likely to have contributed.

Intervention Examined

State Sex and Race Discrimination Laws

Features of the Intervention

Many states passed their own antidiscrimination laws before the federal Equal Pay Act of 1963 and the Civil Rights Act of 1964. Most prohibited unequal pay for women and employment and wage discrimination based on race.

Features of the Study

This study examined the effect of state-level sex and race discrimination laws passed before 1960 on the employment and earnings of protected groups. The authors examined U.S. Census data from 1940 to 1960 for people in all states except Alaska and Hawaii. Theyconsidered adults ages 18 to 70 who identified as African American or Caucasian and who were full-time, full-year workers. The sample excluded people in the armed forces, self-employed workers, unpaid workers, and agricultural and household workers. The study estimated state-level impacts, using the variation in discrimination laws across states to create treatment and comparison groups. Impacts for a protected demographic group were defined as the difference in that group’s change in outcomes relative to another demographic group between states with sex and race discrimination laws and states without such laws.

Findings

  • The study found that sex-related equal pay laws had statistically significant negative effects on women’s employment relative to men’s. African American women experienced a significant 6.9 percentage point reduction in employment relative to African American men; white women had a significant 2.6 percentage point reduction in employment relative to white men.
  • Analysis of the effect of sex-related equal pay laws over time showed an initial, statistically significant negative impact on earnings for women, but a significant positive impact in the longer-term.
  • There were no statistically significant effects of race discrimination laws on employment or earnings for African American men compared with white men in the year a law was passed, but positive effects emerged over time.

Considerations for Interpreting the Findings

Although the authors controlled for differences in outcomes associated with each state and each year, as well as basic demographic characteristics and interactions between these factors, they did not examine or control for different trends in outcomes for the groups being compared in the years leading up to passage of the laws in each state. Differences in pre-intervention trends in employment, for example, could have driven differences in employment following the intervention, and could also potentially have affected the timing of the law change by state legislatures. Because of these issues, the study did not demonstrate that the experiences of the comparison group presented a valid picture of what would have happened to the treatment groups if the legislation had not been enacted.

Causal Evidence Rating

The quality of causal evidence presented in this report is low. This means we are not confident that the estimated effects were attributable to the state sex and race discrimination laws; other factors are likely to have contributed.

Reviewed by CLEAR

August 2015

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