Divergent Paths: Structural Change, Economic Rank, and the Evolution of Black-White Earnings Differences, 1940-2014

Abstract

This paper presents new evidence on the evolution of black-white earnings differences among all men at different points in the distribution. We study two dimensions of earnings gaps: the black-white difference in earnings; and the difference between a black man’s position in the black earnings and the position he would hold in the white distribution. After narrowing from 1940 to the mid-1970s, the median black-white earning gap has since grown as large as it was in 1950. Even as his relative earnings improved then worsened, the median black man’s relative position in the earnings distribution has remained essentially constant. Black men at higher percentiles have experienced significant gains in relative earnings since 1940. Unlike blacks at the median and below, whose relative earnings changes have been chiefly the result of narrowing and stretching of the overall earnings distribution, higher percentile blacks have also experienced significant positional gains over the past 70 years.