Racial social isolation within workplaces may reduce firm productivity. We provide descriptive evidence that African-Americans feel socially isolated from whites. To test whether isolation affects productivity, we estimate models of Total Factor Productivity for manufacturing firms allowing the returns to concentrated economic activity and human capital to vary by the match between each establishment’s racial and ethnic composition and the composition of local area employment. Higher own-race representation increases the productivity return from employment density and concentrations of college educated workers. Looming demographic changes suggest that this drag on economic productivity may increase over time.
First version, September, 2020
J15: Economics of Minorities, Races, and Immigrants; Non-labor Discrimination
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
L11: Production, Pricing, and Market Structure; Size Distribution of Firms
R32: Other Production and Pricing Analysis
R12: Size and Spatial Distributions of Regional Economic Activity
R23: Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics