The threads that bind: Race and gender stratification and the macroeconomics of inequality

Social stratification theories articulate the processes by which social hierarchies are generated and perpetuated. This paper contributes to that literature, exploring the relationship between macroeconomic outcomes and racial/ethnic and gender inequalities in industrial and developing economies. A key factor in the relationship between the macroeconomy and intergroup inequality is that inequality itself has an impact on the distribution of income, opportunities, and well-being. The precise effect of intergroup inequality on growth depends on three factors: the characteristics of job distribution (with jobs often segregated) by ethnicity and gender; the structure of the economy; and the macroeconomic policy environment. Several examples of the direction of the effect of gender and racial inequality on short-and long-run growth are provided, with some evidence showing a positive effect of inequality on growth. In that case, the macroeconomic structures can act as a constraint on equity. Efforts to reduce inequality can be conflictive when inequality is a stimulus to growth. Macroeconomic policy approaches that can render equity compatible with growth are discussed. JEL Classifications: J15, J16, D3, D6, E6.