Changing Wage Structure and Black-White Differentials Among Men and Women: A Longitudinal Analysis

David Card and Thomas Lemieux

No 4755, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Despite several decades of research there is still widespread disagreement over the interpretation of the wage differences between black and white workers. Do the differences reflect productivity differences, discrimination, or both? If lower black earnings reflect a productivity difference, then an economy-wide increase in the relative wages of more highly-skilled workers should lead to a parallel increase in the black-white earnings gap. We evaluate this hypothesis using longitudinal data for men and women from the Panel Study of Income Dynamics. Our findings suggest that returns to observed and unobserved skills of male workers rose by 5-10 percent between 1979 and 1985. For female workers, the return to observed skills was relatively constant while the return to unobserved skills increased by 15 percent. The evidence that black-white wage differentials rise with the return to skill is mixed. Among female workers the black-white wage gap widened in the early 1980s -- consistent with the premise that racial wage differences reflect a productivity difference. For men in our sample the black-white wage gap declined between 1979 and 1985 -- a change that is inconsistent with the rise in the return for skills.

JEL-codes: J31 J70 (search for similar items in EconPapers)
Date: 1994-05
Note: LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as American Economic Review, Vol. 84, No. 2, pp. 29-33, May 1994.

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