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This article reviews the history of race laws in the United States as distinct from the rule of law, an idea found in the writing and speeches of Sadie Tanner Mossell Alexander, the first African American PhD in economics (1921). We review the race laws of slavery, lynching, Negro Jobs, and the making of the Black ghetto. We highlight the life and writings of Alexander and other early African American economists as an example of the cost of racial exclusion in the economics profession and how it has impeded the production of useful knowledge about the workings of the US economy.

I use newly-developed data on Africa to estimate the effects of the international slave trades (circa 1500–1850) on the institutional structures of African economies and societies (circa 1900). I find that: (1) societies in slave catchment zones adopted slavery to defend against further enslavement; (2) slave trades spread slavery and polygyny together; (3) politically centralized aristocratic slave regimes emerge in West Africa and family-based accumulations of slave wealth in East Africa. I discuss implications for literatures on long-term legacies in African political and economic development.

The 1918–47 employee records of the Ford Motor Company provide a rare opportunity to study a firm willing to hire black workers when similar firms would not. The evidence suggests that Ford did profit from discrimination elsewhere, but not by paying blacks less than whites. An apparent “wage‐equity constraint” prevailed, resulting in virtually no racial variation in wages inside Ford. An implication was that blacks quit Ford jobs less often than whites, holding working conditions constant. Arbitrage profit came from exploiting this nonwage margin, as Ford placed blacks in hot, dangerous foundry jobs where quit rates were generally high.

In the last 15 years, economists and economic historians have argued that Africa has undergone a “reversal of fortune” and that ethnic fragmentation is a significant cause of Africa's underdevelopment. In this article, we join these narratives by arguing that the transatlantic slave trade increased the degree of ethnic heterogeneity in Africa today. Using both correlational and causal instrumental variables analysis, we find an economically and statistically significant positive relationship between slave exports and ethnic heterogeneity. This relationship is robust to changes in the scheme for drawing ethnic boundaries and the choice of observational unit.

In 1711, British Parliament chartered the South Sea Company, a public–private corporation chartered to reduce the cost of government borrowing by swapping illiquid short-term government debt for tradeable shares of the South Sea Co. To attract subscribers, the government also awarded the South Sea Co. an international monopoly in the trade of African slaves to Spanish America—the Asiento de Negros. This paper considers the extent to which Asiento-related slave trading was profitable for South Sea Co. shareholders and beneficial to the British financial revolution between 1713 and 1743. First, we use historical financial data to estimate the parameters of a capital asset pricing model of excess returns for South Sea Co. shareholders. We find that the Asiento contract increased risk-adjusted excess returns on South Sea Co. stock between 18 and 24% per year. Second, we estimate profit margins in the South Sea Co. Asiento slave trade. These show a stark positive correlation with company share prices before and after the South Sea Bubble of 1720. Adding slave ship departures to the CAPM specifications confirms the direct contribution of slave trading to shareholder returns. We also find that the Asiento and Asiento-related slave trading increased central government fiscal surplus by 16%. This suggests that profitable slave trading by the South Sea Co. under the Asiento enhanced Great Britian’s fiscal capacity, which could be utilized to enhance a military capacity necessary for securing an empire.

Combining theoretical work with careful historical description and analysis of new data sources, History Matters makes a strong case for a more historical approach to economics, both by argument and by example. Seventeen original essays, written by distinguished economists and economic historians, use economic theory and historical cases to explore how and why \"history matters.\" The chapters, which range in subject matter from the economic theory of irreversible investment to the nineteenth-century decline in U.S. rural fertility to the English poor law reform, are unified by three themes. The first explores the significance, causes, and consequences of path dependence in the evolution of technology and institutions. The second relates to the ways in which economic and political behavior are profoundly shaped and constrained by the cultural and political context inherited from history at a particular point in time. The final theme demonstrates the importance of integrating economic theory into historical research in the gathering and interpretation of data

Most models that describe how the racial prejudices of workers, employers, and consumers lead to labor-market discrimination by race focus on the wage component of the employment package, attempting to show how racial prejudices result in lower wages for black workers. Racial discrimination, however, can take a variety of nonwage forms. A paper investigates the structure of racial discrimination in US labor markets between 1919 and 1943 in a way that incorporates information on the entire wage package. The focus is on worker quit behavior rather than wages. The results indicate that, on the surface, black workers may have appeared to be high-turnover workers. A closer examination, however, shows that, once occupations are controlled for, black workers were much more stable than their white counterparts, suggesting that black workers' job opportunities were racially constrained.

In 1940 the Ford Motor Company employed half of the black men in Detroit but only 14 percent of the whites. We find that black Detroiters were concentrated at Ford because they were excluded from working elsewhere. Those most affected were young married black men. A Ford job was virtually the only opportunity they had to earn a family wage; but to keep it, they had to put out the extra effort that Ford required. White married men in Detroit had better employment opportunities elsewhere, so they tended to avoid Ford or leave very quickly.

Economists have emphasized supply-side learning when explaining long-term trends in racial income differences. This article demonstrates that learning also occurred on the demand side. Estimation of a state-dependence model of the sequence of racial employment outcomes of firms in Cincinnati, Ohio, during World War I shows that the introduction of black workers into a previously all-white firm generated new experiences within the firm, altering its future racial employment decisions.This suggests that more research should be done on how firms and labor markets processed information about workers and how that influenced worker opportunities.