The Labor Market Effects of the 1960s Riots

Although the united states has experienced race-related civil disturbances throughout its history, those that occurred in the 1960s were unprecedented in frequency and scope. Between 1964 and 1971, hundreds of riots erupted in American cities, resulting in large numbers of injuries, deaths, and arrests, as well as considerable property damage concentrated in predominantly black neighborhoods. Law enforcement authorities took extraordinary measures to end the riots, sometimes including the mobilization of National Guard units. In retrospect, the riots marked a turning point in American racial politics, as the carefully orchestrated demonstrations of the early civil rights movementgave way to violent, chaotic civil disturbances.

At the time of their occurrence, the riots prompted congressional investigations into their proximate and underlying causes and into their immediate consequences in the form of looting, property damage, injuries, and deaths.¹ Subsequently, a large sociology literature developed that attempted to identify city-level correlates of the occurrence and severity of riots.² But there have been comparatively few studies of a systematic, econometric nature that examine the impact of the riots on the relative economic status of African Americans or on the cities and neighborhoods in which the riots took place.³

In this paper we study the impact of the 1960s riots in the context of long-term racial disparities in labor market outcomes. Among full-time male workers, the racial gap in average earnings narrowed up to 1975, with periods of sharp convergence (for example, the 1940s) alternating with periods of relative stasis (for example, the 1950s and early 1960s). Since 1970, racial convergence in earnings has slowed markedly, and a substantial part of the observed convergence has been driven by the selection of low-income black males out of the full-time labor force.⁴ Over the same period, the proportion of blacks living in "high poverty" urban neighborhoods increased sharply, and black ghettos turned increasingly "bad" in the sense that residential segregation led to increasingly poor socioeconomic outcomes among young blacks.⁵

The post-1970 rise in concentrated poverty in black central-city neighborhoods has received a great deal of scholarly attention. One prominent view, associated with the work of William Julius Wilson, is that the underlying causes of this adverse trend are essentially macroeconomic in nature.⁶ Technological change and the relative decline of manufacturing employment may have reduced relatively high-wage job openings for urban, unskilled workers. The geographic concentration of poverty was then reinforced by the movement of relatively well-off blacks from central-city neighborhoods to suburbs and the proliferation of single-parent households. Another prominent view, associated primarily with the work of Massey and Denton, emphasizes that preexisting residential segregation and ongoing racial discrimination in housing allowed for the potent endogenous magnification of adverse economic shocks. Feedback among macroeconomic forces, residential segregation, and social norms may have pushed entire neighborhoods into a downward socioeconomic spiral.⁷ The hypothesis we are pursuing is that the riots may be examples of such negative shocks.

Like any shock, some of a riot's impact will be felt directly—in this case, by individuals who were immediately affected by the event. To some extent, these effects may be offset by private sector responses (for example, insurance payments) or changes in government policies (subsidies or loans to riot-afflicted businesses or infrastructure investment in riot areas). But other, and potentially much larger, effects may be indirect. A riot might alter the course of a city's economy by influencing the economic decisions of individuals who were not directly affected by the event. In essence, the hypothesis under investigation has two parts: that a riot's effect on African Americans' labor market outcomes was, on net, negative; and that the magnitude of the local effect increased with the severity of the local riot.

We present two complementary...