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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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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. Jonathan Fisher & Christina Houseworth, 2012. "The reverse wage gap among educated White and Black women," Journal of Economic Inequality, Springer, Springer, vol. 10(4), pages 449-470, December.
  2. James Heckman & Sergio Urzua, 2010. "Comparing IV with structural models: what simple IV can and cannot identify," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP08/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  3. Dionissi Aliprantis, 2013. "Human capital in the inner city," Working Paper, Federal Reserve Bank of Cleveland 1302, Federal Reserve Bank of Cleveland.
  4. Thiel, Hendrik & Thomsen, Stephan L., 2011. "Noncognitive skills in economics: Models, measurement, and empirical evidence," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 09-076 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  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.
  6. Loreto Reyes & Jorge Rodríguez & Sergio S. Urzúa, 2013. "Heterogeneous Economic Returns to Postsecondary Degrees: Evidence from Chile," NBER Working Papers 18817, National Bureau of Economic Research, Inc.
  7. Lex Borghans & Bas ter Weel & Bruce A. Weinberg, 2014. "People Skills and the Labor-Market Outcomes of Underrepresented Groups," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, ILR Review, Cornell University, ILR School, vol. 67(2), pages 287-334, April.

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