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Racial Labor Market Gaps: The Role of Abilities and Schooling Choices

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  • Sergio Urzúa

Abstract

This paper studies the relationship between abilities, schooling choices, and black-white differentials in labor market outcomes. The analysis is based on a model of endogenous schooling choices. Agents’ schooling decisions are based on expected future earnings, family background, and unobserved abilities. Earnings are also determined by unobserved abilities. The analysis distinguishes unobserved abilities from observed test scores. The model is implemented using data from the NLSY79. The results indicate that, even after controlling for abilities, there exist significant racial labor market gaps. They also suggest that the standard practice of equating observed test scores may overcompensate for differentials in ability.

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File URL: http://jhr.uwpress.org/cgi/reprint/43/4/919
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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 43 (2008)
Issue (Month): 4 ()
Pages:

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Handle: RePEc:uwp:jhriss:v:43:y:2008:i4:p919-971

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Web page: http://jhr.uwpress.org/

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Cited by:
  1. Heckman, James J. & Urzua, Sergio, 2009. "Comparing IV with Structural Models: What Simple IV Can and Cannot Identify," IZA Discussion Papers 3980, Institute for the Study of Labor (IZA).
  2. Sergio Urzúa & Esteban Puentes, 2010. "La evidencia del impacto de los programas de capacitación en el desempeño en el mercado laboral," IDB Publications 38038, Inter-American Development Bank.
  3. Houseworth, Christina & Fisher, Jonathan, 2011. "The Reverse Wage Gap among Educated White and Black Women," MPRA Paper 35827, University Library of Munich, Germany.
  4. Dionissi Aliprantis, 2013. "Human capital in the inner city," Working Paper 1302, Federal Reserve Bank of Cleveland.
  5. Judith K. Hellerstein & David Neumark, 2011. "Employment in Black Urban Labor Markets: Problems and Solutions," NBER Working Papers 16986, National Bureau of Economic Research, Inc.

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