Exploitation Through Racialization*

I develop a model of the social construction of race. Racial categories emerge from labor conflict when elites privilege intrinsically irrelevant traits to divide workers against each other and extract workers' surplus. I show that elites use color to grant unequal rights and track these rights across generations because it is heritable, observable, and relatively immutable. Depending on the demographic conditions the elites face, the system of racialization manifests either as ancestry-based or color-based categories. This approach to the social construction of race provides a unified explanation of skin-tone inequality, racial homophily in marriage, the social status of mixed-race people, the psychological wage of Jim Crow, and legal restrictions on manumission. I test for historical variations in racial boundaries using census data from the United States and Brazil and for differential patterns of skin-tone inequality between ancestry-based and color-based systems using survey data from across the Americas.