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Human Capital and Racial Inequality in the US Labor Market

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  • Owen Thompson

Abstract

If racial gaps in measures of human capital like educational attainment and standardized test scores were eliminated, what would happen to racial disparities in wages, employment, and other labor market outcomes? A credible answer to this question is foundational for understanding the nature and scope of racial inequality and discrimination in the United States. This article reviews and synthesizes a literature that studies this question by estimating the extent to which controlling for measures of human capital changes Black–White gaps in labor market outcomes, and discusses various conceptual and methodological issues related to interpreting this type of exercise. I show that while accurately interpreting this exercise and its many variants requires careful thinking, the results elucidate many important and subtle aspects of racial inequality in the United States.

Suggested Citation

  • Owen Thompson, 2026. "Human Capital and Racial Inequality in the US Labor Market," Journal of Economic Literature, American Economic Association, vol. 64(2), pages 558-601, June.
    • Handle: RePEc:aea:jeclit:v:64:y:2026:i:2:p:558-601
    DOI: 10.1257/jel.20251759
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    More about this item

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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