The Effect of Political Power on Labor Market Inequality: Evidence from the 1965 Voting Rights Act

Abstract: A central concern for racial and ethnic minorities is having an equal opportunity to advance group interests via the political process. There remains limited empirical evidence, however, whether democratic policies designed to foster political equality are connected causally to social and economic equality. In this paper, we examine whether and how the expansion of minority voting rights contributes to advances in minorities’ economic interests. Specifically, we consider how the political re-enfranchisement stemming from the passage of the 1965 Voting Rights Act (VRA) contributed to improvements in the relative economic status of black men during the 1960s and 1970s. Using spatial and temporal variation in federal enforcement of the VRA, we document that counties where voting rights were more strongly protected experienced larger reductions in the black-white wage gap between 1950 and 1980. Our analysis of mechanisms suggests that minority political influence improved blacks’ relative position through increased public employment, fiscal redistribution, as well as through implementation and enforcement of group-favoring labor market policies, such as affirmative action and anti-discrimination laws.