The Economic Gains from Equity

Abstract

How much larger would the US economic pie be if labor market outcomes were more equitably distributed by race and ethnicity? Using data from the Current Population Survey (1990–2019), we estimate the improve-ments in labor contribution to aggregate output associated with making the outcomes for Black, Hispanic, and other minority groups at least as favorable as those for non-Hispanic white individuals in employment, hours worked, educational attainment, educational utilization, and earnings. We find significant economic gains, measured in trillions of dollars of GDP. Our results indicate that ensuring all Americans have an equitable opportunity to participate in the economy is an economically significant way to increase aggregate prosperity.