The economic aftermath of the 1960s riots: evidence from property values - a review.

Abstract

In examining the causes of riots in the United States, the authors identified discriminatory norms and public policies, large capital gaps in income and wealth, relatively low demand for unskilled labour due largely to macroeconomic and technological developments, rural–urban migration, rising rates of crimes and unemployment as some of the predominant causative factors. Using city-level and household-level data, the paper found persistent negative and economically significant correlations between riots severity and black-owned property values. The paper attempted to capture the omitted variables that could misstate riots’ true impact on property values by controlling series of city characteristics such as pre-existing trend in housing values, pre-riot city size, black population size, manufacturing, employment, residential segregation, crime and region. The authors adopted the instrumental variable approach to estimating the riot effect and observed that riots have strong negative impact on property values. The paper further took a cursory look at the historical chronology of violent race-related civil disturbances in the US from the early 18th century eliciting the causes, character, magnitude, geographical spread, duration, location, targets, associated number of arrests, injuries, occurrence of arson, and deaths recorded. The severity of the riots were measured in absolute terms using five characteristics (deaths, injuries, arrests, arson and number of days of rioting) on a cumulative basis to form an index.