Being less racist and sexist may account for 25% of increased economic output in the United States over past 50 years

Two of the most important goals of a liberal society are to treat people fairly and to increase economic productivity.

Treating people fairly increases the chance that individuals and communities can  flourish.

Increasing economic productivity usually leads to better overall health, wealth, and happiness.

It’s possible for these two goals to be at odds.

When it comes to racism and sexism in America, the goals don’t seem at odds.

This recent paper found that the United States saw major economic gains by being less racist towards African-Americans and less sexist toward woman.

It used to be the case that most leading professionals were white men. This is less true today.

The authors of the paper explore what we can draw from this change:

 In 1960, 94 percent of doctors and lawyers were white men. By 2010, the fraction was just 62 percent. Similar changes in other highly-skilled occupations have occurred throughout the U.S. economy during the last fifty years. Given the innate talent for these professions has unlikely changed differentially over time across groups, the change in the occupational distribution since 1960 suggests that a substantial pool of innately talented blacks and women in 1960 were not pursuing their comparative advantage. We examine the effect on aggregate productivity of the remarkable convergence in the occupational distribution between 1960 and 2010 through the prism of a Roy model. About one-quarter of growth in aggregate output per person over this period can be explained by the improved allocation of talent.

The paper details some powerful anecdotes to make their case.

For example, Supreme Court Justice Sandra Day O’Connor graduated from Stanford Law School in 1952; despite being ranked third in her class, the only private sector job she could get after graduating was as a legal secretary.

In teasing out what specific changes made things better, the authors consider three possibilities:

Changes in preferences; ie, there wasn’t much discrimination; it’s just that African-Americans and woman increasingly wanted more professional careers post 1960.

Reduction in discrimination in preparing and entering a field: ie, there were barriers that prevented talented people from going to school and entering specific fields.

Reduction in discrimination once in the field; ie, there were a bunch of glass ceilings that prevented advancement.

The authors find that declining barriers to entry into a field explain 24 percent of growth in U.S. GDP per person between 1960 and 2010.

Declining labor market discrimination once in the field explains 6 percent of growth.

Changing  preferences across groups explain little of U.S. growth during this time period.

So it wasn’t that after 1960 a bunch of African-American and women suddenly wanted to become doctors.

Rather, things were bad because a lot of white men prevented African-American and women from becoming doctors.

All the usual caveats apply: it’s one paper on a topic that can probably never be fully understood through pure academic research.

But it’s a useful reminder that being less racist and sexist has both individual rights and economic benefits.

I think increasing educational opportunity, in this sense, is akin to reducing discrimination.

If educational opportunity is further increased in our country, we’re likely to see major gains on both moral and economic fronts.

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