Youth Joblessness and Race: Evidence from the 1980 Census

Abstract

This paper includes a brief review of the economic litera- ture on unemployment, with implications for empirical work on youth unemployment and participation; original empirical work using linear probability and logit models on 1980 Cen- sus microdata; and suggestions for structural models to be used in future work with microdata on youth labor force be- havior. On Census Day in 1980, 41.4% of black male teenage school- leavers, but only 15.9% of white male teenage school—leav- ers, were out of the labor force as well as out of school. Among the labor force participants, the white male unemploy- ment rate was 18.5%, while the black male rate was 30.5%. The behavior of young women was quite similar, except for worse labor force participation among white school leavers. For student male teenagers, the racial differential in la- bor force nonparticipation was only half as bad as for non- students, but the unemployment differential was 22% more unfavorable to blacks. The female student differential in unemployment rates was 14% more unfavorable to blacks. Among both students and nonstudents, and among both young men and young women, there was no significant or large racial differential in the ratio of unemployment to popu- lation. The large racial differential in unemployment is counterbalanced by a large racial differential in labor force participation. There are two very different struc- tural interpretations of these findings: higher black reser- vation wages and discouraged worker effects. As previous researchers have found using other data, sim- ple statistical models do not explain much of the individ- ual variation in youth labor force behavior. Structural models of youth unemployment are proposed for estimation with microdata. These models are designed to ameliorate biases in the simple models from ignoring simultaneity and ecological correlation. These models for microdata have added worker and discouraged worker effects exactly anal- ogous to those in macroeconomic models.