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Explaining Black-White Wage Convergence, 1940-1950: The Role of the Great Compression

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Author Info
Robert A. Margo

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Abstract

The "Great Compression" of the 1940s produced a substantial narrowing in wage differentials in the United States. This paper examines the role of the Great Compression in fostering black-white wage convergence in the 1940s. Using data from the 1940 and 1950 census public use samples, I show that between half and two-thirds of black white wage convergence at the sample means can be attributed to shifts in wage structure associated with the Great Compression. I also demonstrate that, by (temporarily) boosting the incomes of black parents. the Great Compression led to greater increases in schooling levels among black teens between 1940 and 1950 than would have occurred otherwise.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Historical Working Papers with number 0044.

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Date of creation: Mar 1993
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Publication status: published as Industrial and Labor Relations Review, vol. 48, April 1995, pp. 470-481
Handle: RePEc:nbr:nberhi:0044

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N32 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth - - - U.S.; Canada: 1913-

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  1. John J. Donohue III & James Heckman, 1991. "Continuous Versus Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks," NBER Working Papers 3894, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Goldin, Claudia & Margo, Robert A, 1992. "The Great Compression: The Wage Structure in the United States at Mid-century," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 1-34, February. [Downloadable!] (restricted)
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  3. Margo, Robert A, 1986. "Race and Human Capital: Comment," American Economic Review, American Economic Association, vol. 76(5), pages 1221-24, December. [Downloadable!] (restricted)
  4. Card, David & Krueger, Alan B, 1992. "School Quality and Black-White Relative Earnings: A Direct Assessment," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 151-200, February. [Downloadable!] (restricted)
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  5. Blau, Francine D & Kahn, Lawrence M, 1992. "The Gender Earnings Gap: Learning from International Comparisons," American Economic Review, American Economic Association, vol. 82(2), pages 533-38, May. [Downloadable!] (restricted)
  6. Smith, James P, 1984. "Race and Human Capital," American Economic Review, American Economic Association, vol. 74(4), pages 685-98, September. [Downloadable!] (restricted)
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