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Title: The Role of Pre-Market Factors in Black-White Wage Differences
Resulting in 1 citation.
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Neal, Derek A. Johnson, William R. |
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The Role of Pre-Market Factors in Black-White Wage Differences Working Paper, Department of Economics, University of Chicago, March 23, 1994 Cohort(s): NLSY79 Publisher: Department of Economics, University of Chicago Keyword(s): Armed Forces Qualifications Test (AFQT); Discrimination, Job; Family Background and Culture; Minorities; Racial Differences; School Progress; Wage Differentials; Wage Effects; Wage Equations Permission to reprint the abstract has not been received from the publisher. Many attempts to measure the wage effects of current labor market discrimination against minorities include controls for worker productivity that (1) could themselves be affected by discrimination and (2) are very imprecise measures of worker skill. The resulting estimates of residual wage gaps may be biased. Our approach is a parsimoniously specified wage equation which controls for skill with the score of a test administered as teenagers prepared to leave high school and embark on work careers or postsecondary education. This test score is a racially unbiased measure of the skills and abilities these teenagers were about to bring to the labor market. This research finds that this one test score explains all of the black-white gap for young women and much of the gap for young men, a bigger share than has been found by many other studies. For today's young adults, the black-white wage gap is primarily due to a skill gap, which in turn can be traced, at least in part, to observable differences in children's family backgrounds and local environments. We have suggestive evidence that school quality contributes to the skill gap for males. While the results do not deny the existence of labor market discrimination, skill gaps play such a large role that we believe future research should focus on the obstacles black children face in acquiring productive skill. |
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Bibliography Citation
Neal, Derek A. and William R. Johnson. "The Role of Pre-Market Factors in Black-White Wage Differences." Working Paper, Department of Economics, University of Chicago, March 23, 1994. |