The Role of Pre-Market Factors in Black-White Wage Differences / Derek A. Neal, William R. Johnson.

Format:

Book

Author/Creator:

Neal, Derek A.

Contributor:

National Bureau of Economic Research.

Johnson, William R.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5124.

NBER working paper series no. w5124

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1995.

Summary:

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 market 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 post-secondary education. Independent evidence shows that this test score is a racially unbiased measure of the skills and abilities these teenagers were about to bring to the labor market. We find that this one test score explains all of the black-white wage gap for young women and much of the gap for young men. For today's young adults, the black-white wage gap primarily reflects a skill gap, which in turn can be traced, at least in part, to observable differences in the family backgrounds and school environments of black and white children. While our results do provide some evidence of current 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 skills.

Notes:

Print version record

May 1995.