Racial wage differentials among young adults: Evidence from the 1990s (original) (raw)
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Three Essays on the Black White Wage Gap
2009
During the 1960s and early 1970s, the black -white wage gap narrowed significantly, but has remained constant since the late 1980s. The black -white wage gap in the recent period may reflect differences in human capital. A key component of human capital is labor market experience. The first chapter of this dissertation examines how differences in the returns and patterns of experience accumulation affect the blackwhite wage gap. Accounting for differences in the nature of experience accumulation does not explain the very large gap in wages between blacks and whites. Instead, the wage gap seems to be driven by constant differences between blacks and whites which may represent unobserved differences in skill or the effects of discrimination. The second chapter of the dissertation examines the role of discrimination in explaining the wage gap by asking whether statistical discrimination by employers causes the wages of never incarcerated blacks to suffer when the incarceration rate of blacks in an area increases. I find little evidence that black incarceration rates negatively affect the wages of never incarcerated blacks. Instead, macroeconomic effects in areas with higher incarceration rates play a more important role in explaining the variation in black wages. The third and final chapter of the dissertation examines the black -white wage gap and its determinants across the entire wage distribution to determine if the factors that are driving the wage gap vary across the distribution. I find that at the top of the conditional distribution, differences in the distribution of characteristics explain relatively more of the blackwhite wage gap than differences in the prices of characteristics. At the bottom of the conditional distribution, differences in the distribution of characteristics explain relatively more of the wage gap-although this finding varies across different specifications of the model.
Black–White Wage Differentials in a Multiple Sample Selection Bias Model
Atlantic Economic Journal, 2008
This paper simultaneously incorporates two sources of selection bias in the black-white wage equations. It demonstrates that the biases due to an individual's propensity to be in the labor force and the firm's hiring practices are important in determining the black-white wage differential and failure to account for both biases will result in inaccurate estimation of the black-white wage differential. The results indicate a moderate contribution (4.3 percent) of the selectivity biases variables to the wage differential between blacks and whites. The results also show that the black-white wage differential for all black and white workers and across gender decreases as more sources of selection bias are identified and incorporated in the wage equation. The implication is that the observed unadjusted black and white wage gap may be overstated if the wage equation is not adjusted for selection bias. We found that adjusting for double selection bias in the wage equation, the black-white female wage gap is 26 percent larger than the black-white male wage gap, and 12.1 percent larger when we adjust for a single selection bias. The small total effect values of the selection bias due to an individual's participation decision indicate that the black and white labor force participation decisions may be similar, while the black-white participation decisions may differ. The results seem to suggest that at the macro level, the enforcement of policies related to racial issues in the labor market will likely lead to a reduction in the black-white wage gap. Also, policies designed to encourage black males' labor force participation and enforcement of anti-discriminatory laws may be effective in reducing the black-white male's wage differential.
In this paper, we compare the black-white median log wage gap among women aged 26-31 in 1990 and 2011. Two stylized facts emerge. First, the pattern of selection in the two years is similar-the gaps observed among women employed in 1990 and 2011 substantially understate the gaps that would have been observed had all 26-31 year-old women been working in those years. Second, both the median log wage gap observed in the data and the selection-corrected gap increased substantially between the two years, a fact that can be mostly attributed to changes in the distributions of educational attainment among young black and white women. We thank the editor, Helena Skyt Nielsen, and two anonymous referees for their helpful comments.
Decomposing Black-White Wage Gaps Across Distributions: Young U.S. Men and Women in 1990 vs. 2011
2016
We investigate changes in black-white wage gaps across wage distributions for young men and women in the U.S. between 1990 and 2011. Gaps are decomposed into composition and structural effects using a semi-parametric framework. Further, we investigate the roles of occupational choice and self-selection. We find a fall in the composition effect shrinks the wage gap at the lower end of the distribution for men and women. Conversely, an increase in the composition effect for men, and an increase in the structural effect for women, drives a widening of the wage gap at the upper end of the wage distribution.
Social Science Research, 2004
Using an unusually detailed definition of jobs (labor market-occupation-industry cells), I assess whether the Black-White wage gap increases as one ascends the wage hierarchy of local labor markets. Additionally, I test whether the tendency for Black-dominated jobs to pay less than other jobs is stronger among jobs that offer high pay relative to other jobs in the local labor market. There are several important results from the hierarchical linear models. First, there is a substantial net pay penalty associated with Black-dominated jobs, and there is some evidence that this penalty is stronger for Black workers than Whites. Second, the job racial composition effect is weaker among high-paying jobs. In contrast, the net pay gap within jobs is positively associated with the overall pay in a job, implying that ensuring equal access to high-paying jobs will only a partially ameliorate Black-White wage inequality.
Understanding the Sources of Ethnic and Racial Wage Gaps and Their Implications for Policy
Handbook of Employment Discrimination Research, 2005
Previous studies show that controlling for ability measured in the teenage years eliminates young adult wage gaps for all groups except black males, for whom the gap is reduced by approximately three-fourths. This suggests that disparity in skills, rather than the differential treatment of such skills in the market, produces racial and ethnic wage differentials. However, minority children and their parents may have pessimistic expectations about receiving fair rewards for their skills in the labor market and so they may invest less in skill formation. Poor schools may also depress cognitive achievement, even in the absence of any discrimination.
Social Problems, 1994
Annual Demographic File, this study examines three competing explanations of the disparity in black and white male earnings over the life course. The "legacy of discrimination" explanation suggests that current racial disparities in earnings reflect nothing more than past discrimination against older blacks, and that the earnings of younger black and white males should be similar over the life course. The "cumulative effects of discrimination" explanation suggests that the black-white earnings gap increases over the life course, and that this divergence in earnings exists for younger cohorts of males as well as older cohorts. The "vintage hypothesis" argues that the net black-white earnings gap reflects differences in self-investments in human capital and that the racial earnings gap should be virtually constant over time and over the life course for all cohorts (vintages) of black and white male workers. This study presents a synthetic cohort analysis of the effects of aging on the disparity in earnings for black and white males from . It shows that aging has a curvilinear effect on the black-white earnings gap. Younger black males in each year and cohort analyzed were closer to their white male counterparts than middle-aged blacks. However, there was a convergence in the earnings of elderly black and white males. While not completely consistent with any of the formulations, the findings most closely conform to the predictions of the cumulative effect of discrimination explanation.
Selection and the Measured Black-White Wage Gap Among Young Women Revisited
Selection and the Measured Black-White Wage Gap Among Young Women Revisited Derek Neal (JPE 2004) used the NLSY79 to show that the observed median log wage gap between young white and young black women in 1990 underestimated the true, selectioncorrected gap, i.e., the gap we would have expected to see had all of these women been employed in 1990. In this paper, we use the NLSY97 to update his analysis. The observed median log wage gap increased substantially between 1990 and 2011, as did the selectioncorrected gap. These increases are explained to a considerable extent by changes in the distribution of educational attainment across young white and black women.
Labor Market Discrimination and Racial Differences in Premarket Factors
2003
This paper examines minority-white wage gaps. Neal and Johnson (1996) show that controlling for ability measured in the teenage years eliminates young adult wage gaps for all groups except for black males, for whom they eliminate 70% of the gap. Their study has been faulted because minority children and their parents may have pessimistic expectations about receiving fair rewards for their skills and so they may invest less in skill formation. If this is the case, discrimination may still affect wages, albeit indirectly, though it would appear that any racial differences in wages are due to differences in acquired traits. We find that gaps in ability across racial and ethnic groups open up at very early ages, long before child expectations are likely to become established. These gaps widen with age and schooling for Blacks, but not for Hispanics which indicates that poor schools and neighborhoods cannot be the principal factors affecting the slow black test score growth rate. Test sc...