Volume 13, Number 4 (Fall) 1978
Reich, Michael. 1978. "Who Benefits from Racism? The Distribution Among Whites of Gains and Losses from Racial Inequality." Journal of Human Resources 13(4):524-544.
Most neoclassical investigations argue that racial discrimination hurts employers and benefits white workers; however, these distributional hypotheses have not been tested empirically. This article argues that, no matter how racial inequality is produced, and whether or not capitalists individually or collectively practice discrimination, racial inequality benefits capitalists and hurts white workers, by weakening workers' solidarity and bargaining strength. The article presents several tests of this bargaining-power hypothesis. The empirical results support this hypothesis and are inconsistent with prominent neoclassical discrimination models.
The author is Assistant Professor Economics, University of California, Berkeley. This study is based on the author's doctoral dissertation, "Racial Discrimination and the White Income Distribution," Harvard University, 1973. I am grateful to Kenneth Arrow and Samuel Bowles for their assistance. The research was supported by a grant from the Ford Foundation. I am also grateful for assistance from the Institute of Industrial Relations and the Institute of Business and Economic Research, University of California, Berkeley.
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