The declining racial earnings’ gap in United States: Multi-level analysis of males’ earnings, 1960–2000

Abstract

Despite dramatic changes in education and occupational opportunities for Blacks in the United States, facilitated by affirmative action policies, the White–Black earnings’ gap has not vanished. Although the literature on this issue has become substantial no one has yet provided a systematic examination of changes in the earnings’ gap that takes into consideration the concomitant changes in the occupational structure and changes in the racial composition of occupational labor markets as well as changes in characteristics of the labor force. In the present research, we use 5 waves of IPUMS data and hierarchical linear modeling to estimate changes in the effect of race on earnings between 1960 and 2000. The models focus on the interaction of time and race with earnings while controlling for individual-level characteristics (i.e. education) at the individual-level and the characteristics of detailed occupational labor markets (i.e. occupational socioeconomic status, race and gender composition, occupational earnings inequality) at the aggregate level. In order to evaluate the effect of change over time, both linear and non-linear trends in earning gaps are estimated in the labor market as a whole and separately for the public and private sectors. The data reveal that net of changes in the occupational distributions and market-relevant characteristics of Black and White men, the gaps have generally narrowed but at a declining rate. The data also reveal considerable differences in racial earnings inequality between the public and the private sectors. Whereas the unexplained earnings gap in the public sector has virtually vanished by 2000, in the private sector, the gap is still significant, although it declined over time. The findings are discussed in light of past research in order to re-evaluate the contribution of labor market attributes and sector differences to change in earnings disparities between Black and White men in the US.