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September 1996, Vol. 119, No. 9
Robert W. Fairlie and Lori G. Kletzer
Advances in the relative labor market position of African-American men stagnated in the 1980s, after nearly four decades of steady improvement. The structural change of the early years of the decade was particularly costly: past research shows that black men faced a substantially higher risk of job displacement than white men did during that period.1 In contrast, this article offers evidence that the black disadvantage in the incidence of job displacement narrowed over the 1980s and vanished by 1992-93.1 The article documents this important change over the past decade, analyzes its potential causes, and examines trends in two important post displacement outcomes: the probability of becoming reemployed and earnings losses.
Based on the Displaced Worker Surveys carried out by the Bureau of Labor Statistics from 1984 through 1994, the analysis presented shows that, over the 1980s and continuing into the 1990s, racial differences in the risk of job displacement narrowed significantly. In the recession of the early 1980s, the displacement rate for black men employed full time was 7.1 percent, 44 percent higher than the white male displacement rate of 4.9 percent. In contrast, during the recession of the early 1990s, the black male displacement rate of 5.1 percent was 19 percent higher than the white rate of 4.4 percent. Both rates then declined during the recovery that followed the 1990-91 recession, with the black rate declining substantially faster than the white rate. By 1992-93, the black and white displacement rates converged. Although the difference in the rates narrowed over the 1982-93 period, there appears to be no evidence of an improvement in post displacement outcomes for blacks relative to whites.
In this article, we use a variation of a special decomposition technique to account for changes between blacks and whites over time in the burden of job displacement. The analysis reveals a number of factors that help explain the narrowing and subsequent reversal of the displacement rates over the 1980s and into the 1990s. The most important one is the decline in black displacement rates relative to white rates within occupations, educational categories, regions of the country, and industries. Another important factor is the partial shift in the burden of job displacement from lower skilled, blue-collar jobs in the 1980s to higher skilled, white-collar jobs in the 1990s, thereby generating a relative improvement for blacks over this period.
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1 See Robert W. Fairlie and Lori G. Kletzer, "Why Did So Many African-American Men Lose Their Jobs in the 1980's? An Analysis of Black/White Differences in Job Displacement, "working paper no. 330, University of California Santa Cruz, CA, March 1995; Lori G. Kletzer, "Job displacement, 1979-86: how blacks fared relative to whites," Monthly Labor Review, July 1991, pp. 17-25; Equal Employment Opportunity: Displacement Rates, Unemployment Spells, and Reemployment Wages by Race, GAO/HEHS-94-229FS (General Accounting Office, September 1994); and Jennifer M. Gardner, "Worker displacement: a decade of change," Monthly Labor Review, April 1995, pp. 45-57.
1 We focus our analysis on men, following the emphasis on the same in the recent literature on the economic status of black Americans.
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