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Policy approaches to addressing a history of racial discrimination

Key Takeaways

  • Race-blind policies can inadvertently exacerbate racial inequalities by failing to address the lingering effects of past discrimination. To reduce anti-Black discrimination, policymakers must explicitly consider how these policies interact with historical injustices created by past legislation.
  • Recent research has shown that historical injustices, such as slavery and Jim Crow laws, continue to impact racial inequality today due to systemic discrimination that perpetuates the effects of past discrimination.
  • Comprehensive strategies that effectively address the consequences of historical injustices are essential to ensure equal opportunities for all members of society. This principle applies not only to racial inequality but to all forms of inequality and discrimination.

M ay 17 marked the 70th anniversary of the U.S. Supreme Court鈥檚 Brown v. Board of Education decision outlawing segregation in public schools. And it鈥檚 been 60 years since the passage of the Civil Rights Act that banned discrimination based on race, color, religion, sex and national origin.

Despite major court rulings and landmark legislation meant to right the wrongs of racist laws, inequality persists 鈥 partly because the impacts of slavery and segregation were never fully considered in the formulation of the policies meant to address racial disparities.

My research traces the history of legislated discrimination and shows how those now-illegal policies continue to significantly impact Black Americans. Without a thorough understanding of that history, policymakers run the risk of inadvertently perpetuating systemic discrimination and exacerbating existing inequalities.

This policy brief lays out my work and suggests steps that government officials can take toward ensuring more racially equitable economic opportunities for Americans.

The long-term impact of slavery and Jim Crow laws

My research with Hugo Reichardt (Althoff and Reichardt 2024) examines the economic progress of individual Black families from their enslavement to the present day. Our work reveals that Black families have faced repeated obstacles to realizing their full economic potential, and those hurdles often emerged because of past hurdles they faced 鈥 the very definition of systemic discrimination (Bohren, Hull, Imas 2023).

Specifically, we show that the timing and location of a family's emancipation from slavery continue to influence their economic status today. Black families whose ancestors were enslaved until the Civil War have considerably lower education, income, and wealth than Black families whose ancestors were free before the four-year war began in 1861.

For example, we find that a Black man with enslaved ancestry had $12,500 less in predicted annual income in 2023 than a Black man with free Black ancestry 鈥 a Free-Enslaved gap that is around one-quarter of the corresponding Black-white income gap today. Gaps of similar magnitude have persisted throughout the 20th and 21st centuries in other outcomes including education and wealth.

The Free-Enslaved gap persists largely because systemic forces drastically disadvantaged families enslaved until the Civil War and then under the subsequent Jim Crow laws that disenfranchised Black voters, limited Black geographic and economic mobility, and mandated racial segregation throughout the South. Longer enslavement increased the likelihood of a family being concentrated in the Deep South (Figure 1), where the strictest Jim Crow regimes emerged after 1877 and limited Black economic progress.

Figure 1: Number of enslaved people (left) and free Black Americans (right) in 1860

Figure 1. Number of enslaved people (left) and free Black Americans (right) in 1860
Notes: Figure shows the population sizes of enslaved Black Americans and free Black Americans in the 1860 census.

The state and local Jim Crow laws enacted in Southern states affected all Black Americans living in those jurisdictions.

For example, free Black families in Louisiana 鈥 who had attained relatively high economic position 鈥 lost their protected legal status once Jim Crow began. By the mid-20th century, their economic position had converged with formerly enslaved families due to the severe limits imposed by Louisiana's oppressive policies. In contrast, white Americans鈥 economic trajectories, such as their educational attainment, were entirely uncorrelated with those of Black Americans across different states or counties, highlighting the race-specific nature of Jim Crow鈥檚 impact.

On the flip side, families who had been enslaved in regions that ended up adopting less severe Jim Crow laws made substantial economic strides in the decades after slavery (see Figure 2). For example, the regression discontinuity design in our study reveals that Black families freed in Louisiana attained 1.2 fewer years of education by 1940 compared to families freed just a few miles away in Texas. But even in Texas and other states with less severe Jim Crow laws, Black families were still disadvantaged relative to white families by being excluded from specific occupations, industries, and firms; and facing other forms of racial discrimination, particularly in the housing and consumer markets. The impact of systemic racism was pervasive and continued to hinder Black economic progress even in areas with less oppressive Jim Crow policies.

Figure 2: Jim Crow鈥檚 impact on the education of Black families

Figure 2. Jim Crow鈥檚 impact on the education of Black families

While it was difficult to advance economically in areas with restrictive Jim Crow laws, a natural experiment in the construction of schools shows that Black Americans effectively seized opportunities when they were accessible.

Specifically, the Rosenwald school program 鈥 a philanthropic effort to build schools for Black children 鈥 provided access to education for almost a third of all Black children in the South between 1913 and 1932 (Aaronson and Mazumder 2011). We show that gaining access to a school translated into large gains in education among Black children and improved their long-run economic outcomes.

Black men today whose fathers had access to a Rosenwald school (for plausibly exogenous reasons) today are 40 percent more likely to hold a college degree than those whose fathers did not have access.

These results highlight that when and where their environment allowed, Black Americans made substantial progress over generations. The fact that the vast majority of formerly enslaved Americans made far less progress than they could have is because they were concentrated in soon-to-be Jim Crow states.

Systemic discrimination 鈥 higher exposure to discrimination due to past discrimination 鈥 is at the core of why Black Americans' socioeconomic status throughout recent decades has continued to depend on their ancestors' enslavement status. Even today, the income and wealth gap between Black Americans whose ancestors were either free or enslaved is 20 to 70 percent of the gap between Black and white Americans.

How policies interact with the effects of past discrimination

Having established the impact that legalized discrimination continues to have on the socioeconomic status of Black Americans, the next question is how these persistent effects interact with race-blind policies to exacerbate systemic discrimination.

The World War II G.I. Bill is a case in point. The G.I. Bill provided virtually all World War II veterans with generous subsidies to gain additional education, finance their first home, and purchase businesses and farms. The policy has been celebrated as a huge success and credited with creating America鈥檚 middle class.

But it also has become increasingly clear that Black veterans benefited from the policy substantially less than white Americans despite the race-blind statutory terms of the policy.

First, fewer Black men had the opportunity to serve due to racial discrimination in the military. They also had lower levels of education resulting from slavery and Jim Crow (Althoff and Reichardt 2024).

Second, even among the Black Americans who served, many faced severe obstacles in using their benefits (Katznelson 2005). Many colleges did not accept Black Americans at the time, limiting their ability to use the G.I. Bill's educational benefits, especially in the segregated South (Turner and Bound 2003).

In the housing market, severe discrimination among sellers and financial lending institutions made it hard to use the G.I. Bill's homeowner benefits (Cohen 2003). Redlining, anti-Black covenants, and other government-condoned discriminatory practices limited the areas in which Black veterans were able to buy property, impacting the returns they could achieve from homeownership (Fishback et al. 2021, Ali 2023, Hynsj枚 and Perdoni 2024). A survey at the time concluded that in 13 cities in Mississippi, only two of over 3,000 loans guaranteed through the G.I. Bill had been granted to Black veterans (Cohen 2003, p. 171).

The G.I. Bill鈥檚 failure to Black veterans lies in ignoring race. This failure manifested in at least three key ways.

First, the bill's benefits were designed primarily with white veterans in mind, reflecting the broader trend of policies at the time that Katznelson (2005) termed "affirmative action for white people."

Second, the decision to allow local offices to administer benefits, a provision heavily advocated for by Southern states, enabled rampant racial discrimination, particularly in the South, where nearly all administrators were white.

Third, the federal government failed to seize the opportunity to combat discrimination by tying G.I. Bill funds to anti-discrimination efforts. For instance, it could have mandated that any institution receiving G.I. Bill funds 鈥 such as colleges, mortgage providers, or employers 鈥 must commit to providing equal access to veterans regardless of race. Alternatively, the bill could have included specific provisions designed to support Black veterans, acknowledging and addressing the unique challenges they faced due to systemic racism. By failing to confront racial inequality head-on, the G.I. Bill perpetuated and even exacerbated the disparities between white and Black families.

The policy forcefully highlights the problem of ignoring race in policy design. If the goal of policymakers is to design equitable policies, they must consider the lingering impact of past discrimination.

There are many lessons policymakers can learn from the unintended consequences of the G.I. Bill. Considering and understanding government policies that led to discrepancies in formal education and other opportunities is crucial to ending systemic discrimination. Policies that encourage job training, educational opportunities and increased oversight to mitigate discrimination in benefit usage, have been implemented and reflect important progress. What the G.I. Bill highlights, however, remains timely and pressing: ignoring race is not a solution to fighting discrimination 鈥 it can exacerbate racial inequality through systemic discrimination.

The Biden administration's Child Tax Credit reform illustrates how race-blind policies, calibrated to the needs of disadvantaged groups, can enhance racial equity. By increasing benefits for low-income families (disproportionately Black) and eliminating work requirements that hindered single mothers (more prevalent among Black families), the reform significantly reduced racial disparities (Parolin et al. 2022). The reform's positive effect on racial equity was likely the result of careful consideration of the needs of Americans close to the poverty line, but Congress failed to make those reforms permanent, jeopardizing the longevity of the policy鈥檚 impact.

Policy implications

There are several policy proposals being considered to combat the legacy of past discrimination. These policies must be carefully designed and targeted.

Sen. Raphael Warnock (D-Georgia) has recently reintroduced the G.I. Bill Restoration Act, aimed at addressing the racial inequities perpetuated by the original G.I. Bill. The legislation seeks to provide the families of Black World War II veterans who were denied full access to G.I. Bill benefits due to racial discrimination with the opportunity to receive those benefits today.

The approach of carefully identifying and addressing specific disparities created by past governments has precedent in the U.S. After a class action lawsuit accused the Department of Agriculture of anti-Black discrimination, an extensive investigation confirmed that disaster relief aid was systematically withheld from Black farmers but not white farmers during the 1980s and 1990s (Woods 2013). In 2010, President Barack Obama finalized legislation that entitles Black farmers or their descendants to up to $250,000 if they were denied relevant aid in the past.

Affirmative action, while less targeted, seeks to increase diversity and expand opportunities for underrepresented groups. However, its effectiveness in addressing past harm may be limited if the primary beneficiaries are less directly impacted by historical discrimination. Sociologists have shown that the more selective a college is, the less likely its Black students are to be descendants of the enslaved (Massey et al. 2007). Often, selective colleges choose to admit Black students from abroad, not Black American students.

Another promising approach includes policies that provide broad-based support to disadvantaged communities, like the Child Tax Credit reform that removed working requirements. By providing support regardless of employment status, this policy helps mitigate the compounding effects of historical injustices on economically disadvantaged groups.

Any policymaker interested in creating a more equitable society must acknowledge and address the impact of past discrimination. Failing to do so risks perpetuating systemic discrimination and exacerbating inequalities, harming marginalized communities, and undermining the overall social and economic well-being of the nation.

Targeted policies that directly address the specific harms of historical injustices are essential for greater equity. However, broad policies that support disadvantaged communities also play a crucial role in combating the lingering effects of past discrimination. Going forward, policymakers must prioritize comprehensive strategies that effectively address the complex and far-reaching consequences of historical injustices, ensuring all members of society have an equal opportunity to thrive.

九色社区 the Authors

Lukas Althoff is a Postdoctoral Fellow at SIEPR. He joins 九色社区鈥檚 Department of Economics as an Assistant Professor in 2025. His work focuses on the causes and consequences of inequality using tools from applied microeconomics and economic history.

References

Aaronson, D., & Mazumder, B. (2011). The Impact of Rosenwald Schools on Black Achievement. Journal of Political Economy, 119(5), 821-888.

Ali, O. (2023). The Impact of Federal Housing Policies on Racial Inequality: The Case of the Federal Housing Administration. Working Paper.

Althoff, L., & Reichardt, H. (2024). Jim Crow and Black Economic Progress after Slavery. Working Paper.

Baker, R. S. (2022). The Historical Racial Regime and Racial Inequality in Poverty in the American South. American Journal of Sociology, 127.

Bohren, J. A., Hull, P., & Imas, A. (2023). Systemic Discrimination: Theory and Measurement. Working Paper.

Cohen, L. (2004). A Consumers' Republic: The Politics of Mass Consumption in Postwar America. Vintage Books.

Fishback, P. V., Rose, J., Snowden, K. A., & Storrs, T. (2021). New Evidence on Redlining by Federal Housing Programs in the 1930s (NBER Working Paper No. 29244).

Hynsj枚, D. M., & Perdoni, L. (2024). Mapping Out Institutional Discrimination: The Economic Effects of Federal "Redlining". Working Paper.

Katznelson, I. (2006). When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America. W. W. Norton & Company, Inc.

Massey, D. S., Mooney, M., Torres, K. C., & Charles, C. Z. (2007). Black Immigrants and Black Natives Attending Selective Colleges and Universities in the United States. American Journal of Education, 113(2), 243-271.

Parolin, Z., Collyer, S., & Curran, M. A. (2022). Absence of Monthly Child Tax Credit Leads to 3.7 Million More Children in Poverty in January 2022. Poverty and Social Policy Brief, 6(2). Columbia University Center on Poverty and Social Policy.

Turner, S., & Bound, J. (2003). Closing the Gap or Widening the Divide: The Effects of the G.I. Bill and World War II on the Educational Outcomes of Black Americans. The Journal of Economic History, 63(1), 145-177.

Woods, L. L., II. (2013). Almost "No Negro Veteran 鈥 Could Get a Loan": African Americans, the GI Bill, and the NAACP Campaign Against Residential Segregation, 1917鈥1960. The Journal of African American History, 98(3), 392-417.

 

Author(s)
Lukas Althoff
Publication Date
May, 2024