White Convergence

White Convergence - Lecture 6 Black-white economic...

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1/19/2011 1 Lecture 6: Black-white economic convergence • In 1940, over 70 years after emancipation, the average black male still earned 40% of average white male. By 1980, ratio increased to 80%. • Steady improvements in black human capital : Migration to higher-wage North; Investments in higher levels (and better quality) education • Episodic change : Civil Rights movement; School desegregation Black economic activity after emancipation • In theory, the ending of slavery meant that newly freed blacks could move independently, acquire basic education, own property • In practice, economic advancement was slow: – In 1900, 90 percent of blacks still lived in the South (and 85 percent of these lived in rural areas) – Only 15 percent of rural southern blacks owned their own farm (compared to over 60 percent of whites)… many of the remainder worked as sharecroppers
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2 What is sharecropping? Example of a sharecropping contract Landlord agrees to “furnish each family with quarters [living space] on his plantation, with a fourth of an acre of land for a garden and the privilege of getting firewood… and to divide the crop with them in the following proportions to the hirelings one third of the corn, peas and potatoes gathered and prepared for market; one third net proceeds of the ginned cotton…” (Also agreed to provide tools and feed for work animals) Source: Reid, JEH (1973) Why did sharecropping emerge? • Three possible labor contracts: – RENT : Worker rents for fixed sum; keeps whole crop – WAGE : Worker earns fixed wage; keeps none of crop – SHARE : Worker and landlord split crop • Benefits of tenancy: – Worker and land owner share risk of bad harvests. – Worker and land owner share expertise and capital. • Costs of tenancy: – Reduces worker’s incentive to supply labor because he keeps only a fraction of his marginal output. – Reduces worker’s incentive to improve land (e.g., fencing,
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White Convergence - Lecture 6 Black-white economic...

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