Did Racially Motivated Labor Policy Reverse Equality Gains for Everyone?

Abstract

Labor protection policies in the 1950s and 1960s helped many low- and middle-wage white workers in the United States achieve the American Dream. This coincided with historically low levels of inequality across income deciles. After the Civil Rights Act of 1964, policies that had previously helped build the white middle class reversed, especially in states with a larger Black population. Calibrating a labor search model to match minimum wages, unemployment benefits, and bargaining power before and after the Civil Rights Act, I find declining labor protections explain half of the rise in 90/10 wage inequality since the 1960s.

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