Discrimination, Migration, and Economic Outcomes: Evidence from World War I
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.
We thank Sascha O. Becker, Nathan Eisner, James Fenske, Keith Meyers, Allison Shertzer, Max Steinhardt, Randy Walsh, and Marianne Wanamaker as well as seminar participants at Free University Berlin, Southern Denmark, and Pittsburgh for helpful discussions and comments. This paper was written as part of Ferrara’s PhD thesis which received valuable feedback from his advisers, seminar participants at the University of Warwick, as well as the thesis examiners Bishnupriya Gupta and Taylor Jaworski. We also thank Mike Matheis who kindly shared his manufacturing data with us. Corresponding author: email@example.com The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.