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Reparations for African‐Americans as a Transfer Problem: A Cautionary Tale

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  • William A. Darity, Jr.
  • Bidisha Lahiri
  • Dania V. Frank

Abstract

We examine how different methods of reparations payments to African‐Americans affect both the black and nonblack populations of the United States using the framework of the transfer‐problem from international trade theory as a theoretical foundation. We find that reparations payments that provide incentives for blacks to use the payment toward purchases of goods and services produced by nonblacks might expand the income gap. Also a reparations payment in the absence of productive capacity owned by blacks is found to have no final positive impact on black income. These results indicate that a reparations payment strategy must be carefully and cautiously conceived in order to achieve the desired effects.

Suggested Citation

  • William A. Darity, Jr. & Bidisha Lahiri & Dania V. Frank, 2010. "Reparations for African‐Americans as a Transfer Problem: A Cautionary Tale," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 248-261, May.
    • Handle: RePEc:bla:rdevec:v:14:y:2010:i:2:p:248-261
    DOI: 10.1111/j.1467-9361.2010.00550.x
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    References listed on IDEAS

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    1. William Darity, 2008. "Forty Acres and a Mule in the 21st Century," Social Science Quarterly, Southwestern Social Science Association, vol. 89(3), pages 656-664, September.
    2. Harry G. Johnson, 1956. "The Transfer Problem and Exchange Stability," Journal of Political Economy, University of Chicago Press, vol. 64(3), pages 212-212.
    3. Jai-Young Choi & Eden S. H. Yu, 1987. "Immiserizing Transfer under Variable Returns to Scale," Canadian Journal of Economics, Canadian Economics Association, vol. 20(3), pages 634-645, August.
    4. Ruffin, Roy J, 1979. "Growth and the Long-Run Theory of International Capital Movements," American Economic Review, American Economic Association, vol. 69(5), pages 832-842, December.
    5. Anne O. Krueger, 1963. "The Economics of Discrimination," Journal of Political Economy, University of Chicago Press, vol. 71(5), pages 481-481.
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    Cited by:

    1. Wacker, Konstantin M. & Großkurth, Philipp & Lakemann, Tabea, 2014. "Terms of Trade, Foreign Direct Investment, and Development: A Case of Intra-Asian “Kicking Away the Ladder”?," Working Papers on Regional Economic Integration 122, Asian Development Bank.
    2. E. Klein & E. Fouksman, 2022. "Reparations as a Rightful Share: From Universalism to Redress in Distributive Justice," Development and Change, International Institute of Social Studies, vol. 53(1), pages 31-57, January.
    3. William Darity Jr & Dania Frank, 2003. "The Economics of Reparations," American Economic Review, American Economic Association, vol. 93(2), pages 326-329, May.
    4. Konstantin M. Wacker, 2011. "Do multinationals beat down developing countries' export prices? The impact of FDI on net barter terms of trade," Ibero America Institute for Econ. Research (IAI) Discussion Papers 211, Ibero-America Institute for Economic Research.
    5. Patrick L. Mason & James B. Stewart & William A. Darity, 2022. "Collective wealth and group identity: insights from stratification economics," Review of Evolutionary Political Economy, Springer, vol. 3(3), pages 463-491, October.
    6. Konstantin M. Wacker, 2016. "Do Multinationals Deteriorate Developing Countries' Export Prices? The Impact of FDI on Net Barter Terms of Trade," The World Economy, Wiley Blackwell, vol. 39(12), pages 1974-1999, December.

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