Search Results
Title: The Narrowing of Black-White Wage Differentials Is Illusory
Resulting in 1 citation.
| 1. |
Lazear, Edward |
|
The Narrowing of Black-White Wage Differentials Is Illusory American Economic Review 69,4 (September 1979): 553-564. Also: http://www.jstor.org/stable/1808702 Cohort(s): Young Men Publisher: American Economic Association Keyword(s): Job Training; Racial Differences; Training, On-the-Job; Wage Differentials Permission to reprint the abstract has not been received from the publisher. The recent evidence of a substantial narrowing of the black-white wage difference is due to a wage measurement problem. There has not been as great a narrowing in the black-white differential as it appears from looking at observed wages. Instead, blacks in recent cohorts have experienced a relative substitution of current wages for future wages or earnings power. But this differential in total compensation is severely overstated by differences in pecuniary wages. It appears that much of what employers have been giving nonwhites in current wages has been recaptured by a reduction in on-the-job training (OJT) provided. This paper estimates the unobserved component of wages. The size of this component is calculated for non-whites and whites separately and then compared. Since, as it turns out, the component is larger for whites than nonwhites, observed wage differentials understate true differentials. The most important conclusion is that nonwhite gains in pecuniary wages over the eight-year period under study were more than offset by declines in the unobserved OJT component of earnings. It is also the case that in terms of level of OJT, whites seem to receive substantially more than nonwhites in both periods. It is the change over time, however, that finds whites enjoying even greater gains in OJT than nonwhites. This causes the true differential to rise while the observed one falls. |
|
|
Bibliography Citation
Lazear, Edward. "The Narrowing of Black-White Wage Differentials Is Illusory." American Economic Review 69,4 (September 1979): 553-564.
|