Working Paper: NBER ID: w26936
Authors: Andreas Ferrara; Price V. Fishback
Abstract: Are the costs of discrimination mainly borne by the targeted group or by society? This paper examines both individual and aggregate costs of ethnic discrimination. Studying Germans living in the U.S. during World War I, an event that abruptly downgraded their previously high social standing, we propose a novel measure of local anti-German sentiment based on war casualties. We show that Germans disproportionally fled counties with high casualty rates and that those counties saw more anti-German slurs reported in newspapers. German movers had worse occupational outcomes after the war but also the discriminating communities paid a substantial cost. Counties with larger outflows of Germans, who pre-war tended to be well-trained manufacturing workers, saw a drop in average annual manufacturing wages of 1-7% which persisted until 1940. Thus, for discriminating communities, a few years of intense anti-German sentiment were reflected in worse economic outcomes that lasted for more than a decade.
Keywords: discrimination; migration; economic outcomes; World War I; anti-German sentiment
JEL Codes: J15; J61; J71; N32; N42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased anti-German sentiment (F52) | Increased derogatory newspaper articles (Y30) |
| Higher casualty rates in counties (R23) | Increased reports of violence against Germans (N44) |
| Germans disproportionately fled counties (F22) | Significant reduction in German population in those areas (N94) |
| Significant reduction in German population in those areas (N94) | Decline in manufacturing wages (F66) |
| Decline in manufacturing wages (F66) | Negative impact on local economies (F69) |
| Higher casualty rates in counties (R23) | Increased anti-German sentiment (F52) |
| Higher casualty rates in counties (R23) | Germans disproportionately fled counties (F22) |