Effect of monetary policy shocks on the racial unemployment rates in the US |
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| Institution: | 1. Faculty of Economics and Management, East China Normal University, Shanghai 200062, China;2. Institute of New Structural Economics, Peking University, Beijing 100871, China;3. School of Social Development, East China Normal University, Shanghai 200241, China;4. School of Economics and Finance, South China University of Technology, Guangzhou 510006, China;1. Department of Management, Bogazici University, Istanbul 34342, Turkey;2. Naveen Jindal School of Management, The University of Texas at Dallas, Richardson, TX, 75080, USA;1. School of Public Administration, Southwestern University of Finance and Economics, Chengdu, China;2. IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management, F-59000 Lille, France;3. School of Statistics and Applied Mathematics, Anhui University of Finance and Economics, Bengbu, China;4. College of Arts and Science, The Ohio State University, Columbus, United States;1. National Research University Higher School of Economics, 11 Pokrovsky Bulvar, Moscow 109028, Russia;2. Central University of Finance and Economics, 39 South College Road, Beijing 100081, China;1. Institute for East European Studies, Freie Universität Berlin, Germany;2. Laboratory for Comparative Social Research, National Research University Higher School of Economics, Moscow, Russia;3. Leuphana University, Lüneburg, Germany;4. International Center for the Study of Institutions and Development, National Research University Higher School of Economics, Moscow, Russia;1. Department of Economics, Universidad de las Américas Puebla, UDLAP, Ex-Hacienda Santa Catarina Mártir s/n, Cholula Pue 72810, Mexico;2. School of Economics, Universidad Nacional Autónoma de México, UNAM, Circuito Interior, C. U., Ciudad de México 04510, Mexico |
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| Abstract: | This study analyzes the effect of monetary policy shocks on the unemployment rate of different racial groups in the US, using data from 1969Q2 to 2015Q4. Employing a narrative approach to identify monetary policy shocks and local projections, we find that although an expansionary monetary shock affects White workers positively and significantly, the effect on Black workers is larger, and for Hispanic workers it is not statistically different from zero. These results are robust when considering unconventional monetary policy measures in the specification, and when exploring the impact of monetary policy on different genders and age groups. We also highlight how recession affects the transmission channel of monetary policy to the labor market for White and Hispanic workers. Finally, further extensions suggest that the Fed’s monetary policy is effective in reducing the racial unemployment gap, particularly between Whites and Blacks, and during economic booms. |
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| Keywords: | Monetary policy Unemployment Racial disparities |
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