The Forest Behind the Tree


Guy Tchuente examines heterogeneity in how, in the U.S., an elected Governor’s party affiliation affects black worker labour market outcomes.

Motivated by the need to better understand the relationship between politician’s party affiliation and the labour market outcomes of different racial groups, Dr Guy Tchuente’s recent research is a collaboration with Dr Johnson Kakeu and Dr John Nana Francois -who have both lived in the U.S.  ‘Our joint fascination with their political system and the ethnic diversity of the population led to the start of this project.’

‘The tree in the title here refers to the average (aggregated) effect of a democratic governor on black worker labour market outcomes.’ Tchuente explained  ‘That average suggests that a democrat governor is good news for black workers.  But the “forest” of de-aggregated effects suggests a more nuanced answer. A democrat governor is not good news for all black workers.’

Income inequality is a distributional phenomenon. The paper examines the impact of U.S. governor’s party allegiance (Republican vs Democrat) on ethnic wage gap. A descriptive analysis of the distribution of yearly earnings of Whites and Blacks reveals a divergence in their respective shapes over time suggesting that aggregate analysis may mask important heterogeneous effects. This motivates a granular estimation of the comparative causal effect of governors’ party affiliation on labour market outcomes.

The result actually suggests that democrat governors improve labour market outcomes of black workers who earn more. However, if you earn less, democrat govenors will decrease your work hours. It is difficult to say if these outcomes are good or bad given that working less or more under a democratic governor seems to have no effects on income.

‘A black medical doctor for example, will work more hours under a democrat governor.  Whilst a janitor working in three jobs may leave one under a democrat.’

The paper uses a regression discontinuity design (RDD) based on marginal electoral victories and samples of quantiles groups by wage and hours worked. Overall, the distributional causal estimations show that the vast majority of subgroups of Black workers earnings are not affected by democratic governors’ policies, suggesting the possible existence of structural factors in the labour markets that contribute to create and keep a wage trap and/or hour worked trap for most of the subgroups of Black workers. Democrat governors increase the number of hours worked of Black workers at the highest quartiles of earnings. A bivariate quantiles groups analysis shows that democrats decrease the total hours worked for Black workers who have the largest number of hours worked and earn the least. Black workers earnings more and working fewer hours than half of the sample see their number of hours worked increase under a democrat governor.

‘The paper uses the most accepted causal inference method to show that the causal effects of a governor is very heterogenous.’ Tchuente tells us ‘This means that the when implementing policies, government should reflect on how different subgroups of the society could be influenced, instead of focusing on the average citizen.’

Tchuente, Kakeu and Nana Francois have several other research projects on the distributional nature of causal effects in the pipeline.

Read the full paper.