Discrimination, Migration, and Economic Outcomes: Evidence from World War I Andreas Ferrara Price V. Fishback NBER Working Paper No. 26936

Issued in April 2020

NBER Program(s):Development of the American Economy, Labor Studies

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.

(5018 K) Acknowledgments Machine-readable bibliographic record - MARC, RIS, BibTeX Document Object Identifier (DOI): 10.3386/w26936