Early Life Shocks, Market Adjustments, and Black-White Inequality

Abstract This paper investigates the long run impacts of an early life agricultural shock on Black and White sons in the U.S. South. The boll weevil, one of the most destructive agricultural pests in American history, decreased cotton production and resulted in substantial changes to the Southern economy. The impact of this shock on children who were born before and after its arrival is not a priori obvious; it could be positive or negative depending on whether children born after the shock experienced better or worse early life conditions. To examine the empirical effects of this shock on Black and White fathers and sons, the analysis makes use of cross-census links from the Census Tree (Buckles et al., 2023) and race-specific difference-in-differences and triple difference empirical strategies. We find the arrival of the boll weevil benefited Black sons in the long run, as reflected in two 1940 measures of income – wages and imputed income – and did not harm White sons. These differential gains decreased inequality. We provide empirical and historical evidence on a range of mechanisms through which early life conditions may have improved for Black sons relative to White sons.