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Black-White Earnings Ratios since the Civil Rights Act of 1964: The Importance of Labor Market Dropouts

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  • Brown, Charles

Abstract

Previous analyses of postwar black/white earnings ratios have found a more rapid rate of increase in the period since 1964 than before. The reason for this acceleration is unresolved. One view is that federal equal-employment activities have increased the relative demand for black labor. An alternative view is that rising relative earnings reflects (1) reductions in relative supply and (2) the "statistical" effect of low earners raising median earnings by withdrawing from the labor market. This study differs from previous work on the subject in two ways. First, the restrictions on the universe from which published median earnings data by race are calculated are discussed explicitly. The restrict ion most commonly addressed in previous work (having positive earnings in the year in question) is found to be less important than an undiscussed restriction (being employed as a wage and salary worker the following March). Second, data on the distribution of earnings are used to determine the effect of labor market dropouts on median earnings, instead of trying to estimate this effect (as well as demand and supply effects) from time series data. This permits comparison of "corrected" and "uncorrected" post-1964 trends. For males, about half of the "uncorrected" trend remains after the relative earnings variable is corrected for labor market withdrawals. For females, between half and four fifths remains.

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Bibliographic Info

Article provided by MIT Press in its journal Quarterly Journal of Economics.

Volume (Year): 99 (1984)
Issue (Month): 1 (February)
Pages: 31-44

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Handle: RePEc:tpr:qjecon:v:99:y:1984:i:1:p:31-44

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  1. Fuchs, Victor R, 1974. "Recent Trends and Long-Run Prospects for Female Earnings," American Economic Review, American Economic Association, vol. 64(2), pages 236-42, May.
  2. William Darity & Samuel Myers, 1980. "Changes in black-white income inequality, 1968–78: A decade of progress?," The Review of Black Political Economy, Springer, vol. 10(4), pages 354-354, June.
  3. Richard Butler & James J. Heckman, 1977. "The Government's Impact on the Labor Market Status of Black Americans: A Critical Review," NBER Working Papers 0183, National Bureau of Economic Research, Inc.
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Cited by:
  1. Greg Kaplan & Sam Schulhofer-Wohl, 2012. "Interstate Migration Has Fallen Less Than You Think: Consequences of Hot Deck Imputation in the Current Population Survey," Demography, Springer, vol. 49(3), pages 1061-1074, August.
  2. Heywood, John S. & Parent, Daniel, 2009. "Performance Pay and the White-Black Wage Gap," CLSSRN working papers clsrn_admin-2009-42, Vancouver School of Economics, revised 22 Jul 2009.
  3. Borghans, Lex & ter Weel, Bas & Weinberg, Bruce A., 2005. "People People: Social Capital and the Labor-Market Outcomes of Underrepresented Groups," IZA Discussion Papers 1494, Institute for the Study of Labor (IZA).
  4. Richard Blundell & Amanda Gosling & Hidehiko Ichimura & Costas Meghir, 2006. "Changes in the Distribution of Male and Female Wages Accounting for Employment Composition Using Bounds," CIRJE F-Series CIRJE-F-420, CIRJE, Faculty of Economics, University of Tokyo.
  5. Filipski, Mateusz & Edward Taylor, J. & Msangi, Siwa, 2011. "Effects of Free Trade on Women and Immigrants: CAFTA and the Rural Dominican Republic," World Development, Elsevier, vol. 39(10), pages 1862-1877.
  6. Bas ter Weel & Lex Borghans & Bruce A. Weinberg, 2013. "People Skills and the Labor-Market Outcomes of Underrepresented Groups," CPB Discussion Paper 253, CPB Netherlands Bureau for Economic Policy Analysis.
  7. Nathan Marwell, 2009. "Wage disparities and industry segregation: a look at Black-White income inequality from 1950-2000," Profitwise, Federal Reserve Bank of Chicago, issue Jul, pages 10-16.
  8. Heather Antecol & Deborah Cobb-Clark & Eric Helland, 2011. "Bias in the Legal Profession: Self-Assessed versus Statistical Measures of Discrimination," Melbourne Institute Working Paper Series wp2011n18, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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