White Earnings Research Articles

The Black–white lifetime earnings gap

The average white male born in 1900 earned 2.6 times more labor income over their lifetime than the average Black male. This gap is nearly twice as large as the more commonly studied cross-sectional Black–white earnings gap because 48% of Black males born in 1900 died before the age of 30 as compared to just 26% of white males. We calibrate a model of optimal consumption in a world with mortality risk to data describing the life-cycle earnings and survival probabilities of Black and white males born between 1900 and 1970. We find that convergence in Black and white mortality rates led to a 50% reduction in Black–white welfare gaps between the 1900 and 1920 birth cohorts, even as cross-sectional Black–white income gaps for those cohorts remained relatively constant. However, the Black–white welfare gap stagnated for the 1920 to 1970 birth cohorts as gaps in Black–white life expectancy and income remained stable and large.

Revising the Racial Wage Gap Among Men in the United States: The Role of Nonemployment, Underemployment, and Incarceration

This article examines trends in racial earnings disparities to observe how the socially constructed concept of race impacts the U.S. labor market for men from 1981 to 2008. I develop a racial earnings gap measure that accounts for the labor market experience of the nonemployed using Survey of Income and Program Participation (SIPP) Completed Gold Standard data produced by the U.S. Census Bureau. This data set includes administrative earnings data from the Internal Revenue Service and the Social Security Administration merged with SIPP household survey data. Conventional measures that do not account for the nonemployed miss the impact of an increasing number of nonemployed, prime working-age men, particularly Black men, and the accelerating incarceration rate during the 1980s-1990s. An unadjusted estimate of the White earnings premium indicates a large racial earnings gap that fluctuates between about 140% and 150% over 1981-2008. This suggests that labor market conditions and policies may be limiting, but not reducing, racial earnings inequality. The adjusted White earnings premium averages 28 percentage points higher over the time period of this study. The premium also rises further, more quickly, and sustains this higher level longer. The adjusted measure suggests that labor market conditions and policies continue to produce growing levels of racial earnings inequality.

Similar gaps, different paths? Comparing racial inequalities among BA holders in Brazil and the United States

In this article, we compare how racial inequalities are shaped by school-to-work transitions among bachelor’s degree (BA) holders in Brazil and the United States. Our findings reveal how distinct paths linking higher education and the job market can drive similar patterns of Black–White earnings gaps. While the distribution across fields of study matters more for racial earnings inequality in Brazil, differential returns to the same field and occupations are a stronger determinant in the United States. We also find that linked closure, that is, the exclusion of Black BA holders from occupations with high levels of linkage to the labor market, is the predominant mechanism in the United States, while a mix between linked closure and what we term unlinked closure, that is, the exclusion of Black BA holders from occupations that have weak linkages to fields of study, is more important in Brazil. By identifying variations in mechanisms leading to racial inequality, this article contributes to debates in comparative race relations and stratification.

Labor market dynamics and black–white earnings gaps

Earnings gaps between black and white workers have widened over the past 30–40 years. This increase is not explained by differences in observed demographics or the industry and occupational composition of employment. We suggest that variation in labor market dynamics between black and white workers are important. Disparities in job switching, job loss, and associated wage growth result in flatter career wage profiles for black workers and widening earnings gaps over the work life.

Divergent Paths: A New Perspective on Earnings Differences Between Black and White Men Since 1940

We present new evidence on the evolution of black–white earnings differences among all men, including both workers and nonworkers. We study two measures: (i) the level earnings gap—the racial earnings difference at a given quantile; and (ii) the earnings rank gap—the difference between a black man's percentile in the black earnings distribution and the position he would hold in the white earnings distribution. After narrowing from 1940 to the mid-1970s, the median black–white level earnings gap has since grown as large as it was in 1950. At the same time, the median black man's relative position in the earnings distribution has remained essentially constant since 1940, so that the improvement then worsening of median relative earnings have come mainly from the stretching and narrowing of the overall earnings distribution. Black men at higher percentiles have experienced significant advances in relative earnings since 1940, due mainly to strong positional gains among those with college educations. Large relative schooling gains by blacks at the median and below have been more than counteracted by rising return to skill in the labor market, which has increasingly penalized remaining racial differences in schooling at the bottom of the distribution.

SINGLE MOMS AND DEADBEAT DADS: THE ROLE OF EARNINGS, MARRIAGE MARKET CONDITIONS, AND PREFERENCE HETEROGENEITY

AbstractWhy do some men father children outside of marriage without providing support? Why do some women have children outside of marriage when they receive little support from fathers? Why is this behavior more common among Blacks than Whites? We estimate a dynamic equilibrium model of marriage, employment, fertility, and child support decisions. We consider the extent to which low earnings, marriage market conditions, and preference heterogeneity explain nonmarital childbearing, deadbeat fatherhood, and racial differences in these outcomes. We find the Black–White earnings gap and preference heterogeneity explain a substantial portion of racial differences, whereas marriage market conditions are less important.

BLACK AND WHITE FERTILITY, DIFFERENTIAL BABY BOOMS: THE VALUE OF EQUAL EDUCATION OPPORTUNITY

Abstract:This paper produces new estimates for white and black mortality and fertility at the state level from 1800(20)–2000. It produces new estimates of black and white schooling for this same period. Using a calibrated model of black and white parents, we fit the time series of black and white fertility and schooling. We then produce estimates of the benefits of equal education opportunity for blacks over the period 1820–2000. For the better part of US history, blacks have suffered from less access to schooling for their children than whites. This paper quantifies the magnitude of this discrimination. Our estimates of the welfare cost of this discrimination prior to the Civil War range between 0.5 and 20 times black wealth, and between 0.5 and 10 times black wealth prior to 1960. Further we find that the Civil Rights era was valued by blacks in the South by between 1% to 2% of wealth. Outside of the South, we find significant costs of discrimination prior to 1960, ranging from 6% to 150% of black wealth. For these divisions from 1960–2000, blacks have attained rough parity in schooling access. The welfare magnitudes are similar to the hypothetical gains to blacks if they had white mortality rates. We show that the model’s black and white human capital series are strongly, positively correlated with state output measures, black and white permanent incomes and black and white earnings.

Separate and Unequal in the Labor Market: Human Capital and the Jim Crow Wage Gap

Competing explanations for the long-standing gap between black and white earnings attribute different weight to wage discrimination and human capital differences. Using new data on local school quality, we find that human capital played a predominant role in determining 1940 wage and occupational status gaps in the South despite entrenched racial discrimination in civic life and the lack of federal employment protections. The resulting wage gap coincides with the higher end of the range of estimates from the post–Civil Rights era. We estimate that truly “separate but equal” schools would have reduced wage inequality by 29%–48%.

Children of the Prison Boom: Mass Incarceration and the Future of American Inequality. By Sarah Wakefield and Christopher Wildeman. New York: Oxford University Press, 2014. 231 pp. $34.95 cloth.

Children of the Prison Boom: Mass Incarceration and the Future of American Inequality. By Sarah Wakefield and Christopher Wildeman. New York: Oxford University Press, 2014. 231 pp. $34.95 doth.In his majority opinion in United States v. Windsor (2013), Justice Anthony Kennedy offered a novel argument for invalidating the federal refusal to recognize same-sex marriages. The Defense of Marriage Act, Kennedy explained, humiliates children raised by same-sex couples. Many regulatory schemes, whether civil or criminal, have spillover effects onto the children of regulated subjects. Judicial acknowledgement of those effects in the same-sex marriage context, however, contrasts strikingly with the judicial incuriosity about parallel effects in other domains, particularly in the criminal law.Since the 1970s, the United States has experienced explosive growth in incarceration. Mass incarceration unequally affects different racial groups. Black men lacking a high school diploma are more than five times more likely to be incarcerated, for example, than similarly situated white men (p. 15). One in four black children in the 1990 cohort experienced paternal incarceration (p. 41). Does mass incarceration humiliate, or inflict worse harms, on children? And does the effect differ by racial group in ways that influence larger patterns of racial inequality?The answers are not obvious. The incarcerated population is drawn from a relatively narrow slice of the left-tail of the income distribution. Its direct effect on inequality is tightly bounded. Western, for example, estimated the effect of incarceration on the gap between black and white earnings to be around three percent (Western 2006). Further, parental incarceration might have no effect if it is caused by the same underlying factors that cause other undesirable childhood outcomes (e.g., poverty, health problems, and homelessness). Alternatively, parental incarceration might enhance the welfare of children by removing a source of violent risk and criminality from the household.Documenting the causal effect of parental incarceration on childhood outcomes raises nettlesome methodological problems: Randomized experiments are out of bounds. Few large-scale data-sets contain extensive longitudinal evidence. Existing data presents significant identification problems. The central contribution of Children of the Prison Boom is the application of sophisticated econometric methodologies to a range of national and city-level data to generate deeply sobering evidence of incarceration's devastating effect on children, and in particular African-American children. Focusing on the causal effects of (largely paternal) incarceration on children's mental health, behavioral outcomes, homelessness, and infant mortality, Wakefield and Wildeman also persuasively demonstrate that mass incarceration is a significant causal pathway for the intergenerational reproduction of racial inequality.To generate estimates of parental incarceration's causal effects, Wakefield and Wildeman rely on three large longitudinal datagathering efforts: the twenty-city Fragile Families and Child Wellbeing study, the single-city Project on Human Development in Chicago Neighborhoods, and the multistate Pregnancy Risk Assessment Monitoring Systems. Longitudinal data allows them to deploy propensity-score matching, within-person change models, and synthetic regressions to estimate the average effect of parental incarceration on outcomes of interest. In respect to each independent variable of interest, Wakefield and Wildeman apply different methods and present several model specifications. By generating estimates of causal effects that are robust to both method and model specification, they generate powerful evidence of causality. …

Socioeconomic Diversity Among African Immigrants in the United States: An Intra-African Immigrant Comparison

Recent studies on Black immigrants in the USA report higher than average socioeconomic and educational attainment for African immigrants. Based on an intra-African immigrant comparison, we examine the generalizability of this finding to African groups of differing countries and regions using data from the 1990 and 2000 5 % U.S. census Integrated Public Use Microdata Samples (IPUMS). We specifically ask whether hourly earnings of African immigrants vary by region of origin. Results of our analyses reveal that sending region is an important determinant of variations in hourly earnings among African immigrants. Also, data indicate that both race and gender are significantly associated with earning outcomes; with the earnings of males and whites significantly higher than those of females and blacks. We discuss these findings in the context of the so-called “black immigrant success story.”

Black–White Earnings Gap among Restaurant Servers: A Replication, Extension, and Exploration of Consumer Racial Discrimination in Tipping

There is a rich history of social science research centering on racial inequalities that continue to be observed across various markets (e.g., labor, housing, and credit markets) and social milieus. Existing research on racial discrimination in consumer markets is, however, relatively scarce and that which has been done has disproportionately focused on consumers as the victims of race‐based mistreatment. As such, we know relatively little about how consumers contribute to inequalities in their roles as perpetrators of racial discrimination. In response, in this article, we elaborate on a line of research that is only in its infancy stages of development and yet is ripe with opportunities to advance the literature on consumer racial discrimination and racial earnings inequities among tip‐dependent employees in the United States. Specifically, we analyze data derived from an exit survey of restaurant consumers (N = 394) in an attempt to replicate, extend, and further explore the recently documented effect of service providers’ race on restaurant consumers’ tipping decisions. Our results indicate that both white and black restaurant customers discriminate against black servers by tipping them less than their white co‐workers. Importantly, we find no evidence that this black tip penalty is the result of inter‐racial differences in service skills possessed by black and white servers. We conclude by delineating directions for future research in this neglected but salient area of study.

Estimation of Censored Quantile Regression for Panel Data With Fixed Effects

This article investigates estimation of censored quantile regression (QR) models with fixed effects. Standard available methods are not appropriate for estimation of a censored QR model with a large number of parameters or with covariates correlated with unobserved individual heterogeneity. Motivated by these limitations, the article proposes estimators that are obtained by applying fixed effects QR to subsets of observations selected either parametrically or nonparametrically. We derive the limiting distribution of the new estimators under joint limits, and conduct Monte Carlo simulations to assess their small sample performance. An empirical application of the method to study the impact of the 1964 Civil Rights Act on the black–white earnings gap is considered. Supplementary materials for this article are available online.

An Anatomy Of Racial and Ethnic Trends in Male Earnings in the U.S

Progress in narrowing black–white earnings differences has been far from continuous, with some of the apparent progress resulting from labor force withdrawal among lower‐skilled African Americans. This paper documents racial and ethnic differences in male earnings from 1950 through 2010 using data from the decennial census and American Community Surveys. Emphasis is given to annual rather than weekly or hourly earnings. We take a quantile approach, providing evidence on medians and other percentiles of the distribution. Treatment of imputed earnings greatly affects measured outcomes. Hispanic men have exhibited earnings growth similar to white men over several decades. Black men have been left behind economically due in large part to increased joblessness, a process exacerbated by weak labor market conditions. By 2010, joblessness had risen to over 40 percent and the median black–white earnings gap was the largest in at least 60 years.

Distributions of Intergenerational Earnings: A Nonparametric Analysis of Racial Differences

Nonparametric methods are used to analyze distributions of intergenerational earnings. A stochastic kernel generates stationary distributions for African-Americans and whites, indicating a long-run outcome not in favor of racial convergence. Tests indicate that the distribution of white earnings stochastically dominate the earnings distributions of African-Americans from similar economic backgrounds. Within-race decile comparisons demonstrate that the distributions for whites improve as fathers' earnings improve; each increase in fathers' deciles progressively improves the entire distribution for sons. The same results do not exist for African-Americans who appear to have extensive within-race mobility.

Simulation Estimation of the Convergence of the Black–White Earnings Gap and Income Dynamics*

AbstractIn this article, the effect of Title VII of the 1964 Civil Rights Act on the convergence of the black–white earnings gap and income dynamics is studied through the dynamic panel Tobit models implemented using the simulation estimators. It is found that the black–white earnings gap declined moderately after the implementation of Title VII of the 1964 Civil Rights Act in 1965. Based on the simulation studies of wage trajectories, it is also found that the positive impact of the Civil Rights Act on the convergence of the black–white earnings gap is especially significant for the group of middle‐aged and highly educated workers. Moreover, the rich dynamic structure of the earnings process is identified from the Current Population Survey‐Social Security Administration data set. It is shown that the various sources of dynamics in the earnings process are dominated by spurious state dependence for both blacks and whites.

Understanding Permanent Black-White Earnings Inequality

For more than 30 years, the ratio of average black earnings to average white earnings has remained close to 0.6. Additionally, US cities have remained dramatically segregated by race. This paper provides a joint theory of pre-market skills and residential segregation for quantitatively studying these phenomena. It is established that the magnitude of racial and earnings sorting observed in US cities implies 70 percent of observed black-white inequality. While the mechanism posed is intricate, all of its three non-standard components are essential for permanent black-white inequality to arise in a steady state: neighborhood human capital externalities, house price differences across neighborhoods, and preferences over neighborhood racial composition.

Earnings attainment of immigrants in the USA: the effects of race, gender, and place of birth

PurposeThe purpose of this paper is to examine the effect of race, gender, and region of birth by assessing the earnings of blacks and whites from Africa, blacks from the Americas, whites from Europe and Asians from Asia.Design/methodology/approachUsing data from the 2000 Census of Population and Housing, different income levels were used to see if there were any variations in earnings. Logistic regression analyses were used to estimate the odds of earnings at the various percentiles of the income of white African men, controlling for the human capital resources and other demographic variables.FindingsThe paper finds an unambiguous race effect among male workers. White males from both Africa and Europe have significant advantage over non‐white male workers from Africa, the Americas, and Asia. However, the earnings attainment is more favorable to white African males regardless of income levels. Further, a gender effect is also found in that relative to the earnings of white African‐born males, all the female workers in our study had lower odds at all the earning percentiles regardless of race and region of origin.Originality/valueThis paper helps clarify the issue of gender and stratification as it relates to immigrants in the USA.

Initial conditions at Emancipation: The long-run effect on black–white wealth and earnings inequality

Black–white wealth inequality is much greater than black–white earnings inequality in the United States. The existing empirical literature has not been able to fully explain the wealth gap. This paper investigates how much of current black–white income and wealth inequality can be explained by initial conditions at Emancipation and nearly 100 years of segregated schools. A two-sector model with group-specific human capital accumulation and school expenditure differences can explain the path of black–white convergence in earnings over the past 130 years. The model also reproduces the fact that black–white wealth ratios remain much lower than black–white earnings ratios.

Education and Labor Market Discrimination

Using a model of statistical discrimination and educational sorting, we explain why blacks get more education than whites of similar cognitive ability, and we explore how the Armed Forces Qualification Test (AFQT), wages, and education are related. The model suggests that one should control for both AFQT and education when comparing the earnings of blacks and whites, in which case a substantial black-white wage differential emerges. We reject the hypothesis that differences in school quality between blacks and whites explain the wage and education differentials. Our findings support the view that some of the black-white wage differential reflects the operation of the labor market. (JEL I21, J15, J24, J31, J71)

Beyond Hispanic/Latino: The importance of gender/ethnicity-specific earnings analyses

The effect of economic change on the Latino to non-Latino White earnings gap has been well documented; however much of this research has focused on Latinos as a general category with little focus on subgroup variations. Despite varied histories and demographic characteristics Mexicans, Puerto Ricans and Cubans, the largest Hispanic subgroups, have usually been combined in analyses of earnings gaps. Consequently, we know little about differential effects of the “new economy” on earnings by subgroup across labor markets. Using a sample consisting of Mexicans, Cubans, Puerto Ricans, and non-Hispanic Whites residing in 106 metropolitan statistical areas (MSA) from the 2000 1-percent I-PUMS, we examine the influence of human capital, deindustrialization, immigration, and ‘new economy’ measures on Latino/a earnings gaps. Multi-level model analyses reveal that Latino subgroups have differently sized earnings gaps, that human capital and demographic characteristics reduce the gaps by more than seventy percent, that the gaps vary independently across MSAs and that the effects of labor market characteristics on these gaps vary by subgroup. New economy characteristics are most important for non-Hispanic White males, thereby indirectly modifying gender-ethnicity gaps. These findings highlight the importance of gender/ethnicity-specific earnings analyses.