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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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  • Charles Brown

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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File URL: http://www.nber.org/papers/w0617.pdf
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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0617.

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Date of creation: Jan 1981
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Publication status: published as Brown, Charles. "Black-White Earnings Ratios Since the Civil Rights Act of 1964: The Importance of Labor Market Dropouts." The Quarterly Journal of Economics, Vol. 99, No. 1, (February 1984), pp. 33-44.
Handle: RePEc:nbr:nberwo:0617

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  1. 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.
  2. 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.
  3. 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.
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Cited by:
  1. 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.
  2. Richard Blundell & Amanda Gosling & Hidehiko Ichimura & Costas Meghir, 2007. "Changes in the Distribution of Male and Female Wages Accounting for Employment Composition Using Bounds," Econometrica, Econometric Society, vol. 75(2), pages 323-363, 03.
  3. 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.
  4. Greg Kaplan & Sam Schulhofer-Wohl, 2010. "Interstate migration has fallen less than you think: consequences of hot deck imputation in the Current Population Survey," Working Papers 681, Federal Reserve Bank of Minneapolis.
  5. Antecol, Heather & Cobb-Clark, Deborah A. & Helland, Eric, 2011. "Bias in the Legal Profession: Self-Assessed versus Statistical Measures of Discrimination," IZA Discussion Papers 5831, Institute for the Study of Labor (IZA).
  6. 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.
  7. d'Haultfoeuille, Xavier & Maurel, Arnaud & Zhang, Yichong, 2014. "Extremal Quantile Regressions for Selection Models and the Black-White Wage Gap," IZA Discussion Papers 8256, Institute for the Study of Labor (IZA).
  8. Lex Borghans & Bas ter Weel & Bruce A. Weinberg, 2006. "People People: Social Capital and the Labor-Market Outcomes of Underrepresented Groups," NBER Working Papers 11985, National Bureau of Economic Research, Inc.
  9. Zandvakili, Sourushe, 2000. "Dynamics of earnings inequality among female-headed households in the United States," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 29(1), pages 73-89.
  10. 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.

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