Routledge Handbook of Major Events in Economic History by Parker Randall E.; Whaples Robert M.;

Author:Parker, Randall E.; Whaples, Robert M.;
Language: eng
Format: epub
ISBN: 1125169
Publisher: Taylor and Francis

The effects of the riots

In comparison with studies of the riots' causes, scholarship on the riots' effects is less extensive. Nonetheless, the riots' effects are central to our interpretation of their historical significance. Did the riots affect the course of urban economies? Did they really matter for the cities and neighborhoods in which they occurred? Or were they merely destructive sideshows to a deeper story of urban economic change? The challenge for researchers is to estimate the counterfactual trend of places that were affected by the riots. That is, one must imagine what their post-1960 trends would have been without the riots.

Because the riots never destroyed a large portion of a city's capital stock, the direct economic effects through that channel were probably quite limited. Strong effects through other channels, however, are plausible. In particular, in models of spatial equilibrium, in which people and firms locate to maximize utility or profits (Roback 1982, Moretti 2011), an event that affects perceived local amenities, such as security or taxes, or affects local productivity can drain a place of population, property value, and income. Property value trends are particularly interesting in the context of urban riots because they reflect a broad range of forward-looking considerations that ultimately feed into demand for residence in a particular location.

Collins and Margo (2004, 2007) attempt to measure the “treatment effects” of riots in labor markets and housing markets. If, conditional on black population size and region, variation in riot severity across cities was essentially randomly distributed, then parsimonious ordinary-least-squares (OLS) regressions may provide useful estimates of the riots' effects on various economic outcomes. Given the existing body of research on cross-city variation in the severity of the riots, a simple OLS approach to measurement is defensible, but it is straightforward to check the OLS regression results' robustness to the inclusion of several additional control variables.

Table 19.3 shows simple comparisons of property value trends across three groups of cities with different levels of riot severity. The property value information pertains to owner-occupied residential housing and is from the decennial Census of Housing, which is the most consistent long-run, nationally representative source of information. Nominal property value appreciation was slower in high-riot-severity cities than elsewhere, especially for black owned residential properties. This general finding is confirmed in regressions that adjust for observable differences across cities in pre-1960 property value trends, residential segregation, manufacturing employment, crime, and region. There is no evidence of a rebound in relative property values between 1970 and 1980. Overall, it appears that between 1960 and 1980 black-owned property declined in value by about 14 percent in high-severity cities compared to low-severity cities, after adjusting for observable city-level characteristics. Readers are referred to Collins and Margo (2007) for a more extensive discussion of the regression analysis, including instrumental variable estimates.

One interpretation of the relatively strong effect on black-owned property values is that these properties were likely to be closer to the riots than other properties in the city due to the high degree of residential segregation.

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