Senior Thesis: The Economic Effects of the Ku Klux Klan

When the Ku Klux Klan, a white supremacist organization, re-emerged in the early half of the 20th century, it significantly reshaped economic opportunity for local Black children in the short term, and its presence continues to perpetuate inequality a century later, according to senior thesis research from Julian Haas ’26.

“What really surprised me was the magnitude of the effects,” said Haas, an economics and mathematics double major. His research demonstrates that discriminatory non-governmental institutions can produce immediate and lasting inequality.

When Haas began reading papers on political economy in his sophomore year, he became interested in a question he felt scholars had not fully answered: Can discriminatory institutions reshape the distribution of economic opportunity across generations?

“I noticed a gap in the literature on institutions. Much of that work focuses on institutions created and enforced by the state,” said Haas. Instead, he aimed to observe the implications of non-state actors: “I was interested in groups outside the formal state that sustain and enforce discriminatory institutions, and whether those institutions can have persistent effects on economic opportunity.”

To find out, Haas traced the Klan’s effects from the early 20th century to the present. He first measured whether the presence of Klan chapters widened racial gaps in white-collar employment, school attendance, and homeownership by using U.S. Census data. He then examined whether childhood exposure to the Klan altered occupational mobility—the probability that a son attained a higher-status occupation than his father—by tracking father-son job data from census records. To determine whether the Klan’s effects persisted into the modern era, he also used contemporary estimates of upward income mobility for children born decades after the second Klan’s decline.

The KKK first began in the 1860s but re-emerged in its most well-known form in 1915 following the release of the film, The Birth of a Nation. Haas estimated the causal effects of childhood Klan exposure on upward occupational mobility by comparing exposure to the film with job status.

In the short run, Haas found that the Klan’s presence widened racial disparities across multiple dimensions of economic progress. In terms of childhood exposure, the KKK reduced upward occupational mobility for Black children by 25 percent and increased mobility for white children by 20 percent.

The short-term findings suggested a redistribution of opportunity away from Black children and toward white children within the same counties. The starkest shift appeared in white-collar employment. Haas found that racial disparities widened most sharply in access to high-skilled, predominantly white-collar occupations, swinging by around 60 percent toward white individuals.

Haas also found that a century after the KKK re-emerged, children born in former Klan counties ranked lower in the national income distribution as adults, regardless of race. “Although in the short run, Black kids lose and white kids win, in the long run, everybody loses,” he explained.

This finding suggested that the short-term gains in mobility and opportunity for white individuals did not persist, indicating the Klan produced long-term disadvantages for all people. “The idea that in the short run, there’s such a large trade-off, and in the long run, everyone does much worse—to me was pretty shocking,” Haas said.

Ultimately, Haas’s main contribution is to show that discriminatory institutions enforced outside the formal state can have persistent effects on economic opportunity. His findings suggest that the long-term effects were as a result of changes in local environments, continued organized Klan activity in the 1960s to now, criminal justice disparities, education, and fertility outcomes for Black individuals within the counties.

In examining the long-term effects of Klan presence, Haas found that the criminal justice system was one important channel through which these effects persisted. He showed that the KKK helped, “fundamentally reshape local environments,” through lasting changes to criminal justice institutions. Even decades after the Klan’s decline, Haas found higher incarceration rates among children born in counties that had hosted Klan chapters.

As his final year at Wesleyan comes to a close, Haas reflected on the unique undergraduate research opportunities the University has provided. “I’m very fortunate to have gone to a place like this where undergrads have such exposure to research the way that we do,” he said.

After graduation, Haas will be working for the Federal Reserve Bank of New York as a two-year research assistant. “This experience definitely solidified the fact that economic research is what I want to do in the future,” he said.