We observe empirical differences between races across various macroeconomic variables for the White, Black, Asian, and Hispanic populations in the U.S. For instance, the Black unemployment rate in the U.S. is more often than not double the White unemployment rate. In this paper, I treat nine macroeconomic variables as noisy indicators of economic activity and estimate an index that measures the economic activity of racial demographic groups in the U.S., called Economic Activity by Race (EAR). The noise of the indicators motivates the use of Kalman filter estimation to extract a common component from the noisy indicator variables. My index suggests that there are empirical differences between Black and White economic activity in the U.S., supporting the disparities found between races in racial stratification literature. Further, my results suggest that a structural shock to White economic activity is more persistent than a structural shock to Black, Asian, or Hispanic economic activity due to more heterogeneous sensitivity to various measures of economic well-being.View the Full Working Paper
Economic Activity by Race
WP 23-16 – This paper introduces Economic Activity by Race (EAR), a measure that is comparable to what GDP by race and ethnicity might look like. EAR suggests that there are disparities of economic well-being between racial groups in the U.S.