CAN THE HUMAN CAPITAL APPROACH EXPLAIN LIFE‐CYCLE WAGE DIFFERENTIALS BETWEEN RACES AND SEXES?

Huoying Wu

Economic Inquiry, 2007, vol. 45, issue 1, 24-39

Abstract: Using data from the National Longitudinal Survey of Youth–1979 cohort (NLSY79), this paper shows the importance of postschool human capital investment in describing both gender and racial wage gaps. The empirical results suggest that male‐female wage gaps, regardless of race, are mainly caused by gender differences in the human capital production process; generally, men gain more work experience and therefore have lower marginal costs of human capital production. Black‐white lifetime wage differentials could partly result from higher implicit interest rates for blacks, while the deterioration of black males’ relative economic status as they age can be attributed to higher depreciation rates of their human capital stock. (JEL J24, J30, C61)

Date: 2007
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