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Education and wages in the 1980s and 1990s: are all groups moving up together?

  • Katharine L. Bradbury
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    A considerable body of economics research has described and investigated the educational wage premium-the degree to which highly educated workers are paid more than less educated workers. The payoff to education has risen steeply in recent decades and accounts for a significant fraction of the increase in overall wage inequality. These two facts have led many to conclude that, at least from an individual perspective, higher educational attainment is a passport out of the lower end of the income distribution. However, given the time and resources that both individuals and society are investing in higher education, it seems useful to ask if everyone sees the same payoff to educational upgrading. ; The author describes median earnings by sex, race, Hispanic origin, and educational attainment during the 1980s and 1990s and then seeks out the sources of wage differences at each education level. She finds that some wage differences are attributable to differences in non-education worker qualifications such as work experience, or job characteristics such as occupation. But after controlling for a variety of these observable characteristics and for business cycle influences, wage disparities by race, Hispanic origin, and sex remain, even within educational categories. For example, at the end of the 1990s, blacks not only earned lower wages at each education level, but also realized less of an increment to wages for additional education (graduating from high school or earning a college degree) than otherwise similar nonblacks.

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    Article provided by Federal Reserve Bank of Boston in its journal New England Economic Review.

    Volume (Year): (2002)
    Issue (Month): Q 1 ()
    Pages: 19 - 46

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    Handle: RePEc:fip:fedbne:y:2002:i:q1:p:19-46
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    1. Derek A. Neal & William R. Johnson, 1995. "The Role of Pre-Market Factors in Black-White Wage Differences," NBER Working Papers 5124, National Bureau of Economic Research, Inc.
    2. Richard J. Murnane & John B. Willett & John H. Tyler, 1999. "Who Benefits from Obtaining a GED? Evidence from High School and Beyond," NBER Working Papers 7172, National Bureau of Economic Research, Inc.
    3. Stephen V. Cameron & James J. Heckman, 1991. "The Nonequivalence of High School Equivalents," NBER Working Papers 3804, National Bureau of Economic Research, Inc.
    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.
    5. Francine D. Blau & Lawrence M. Kahn, 2000. "Gender Differences in Pay," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 75-99, Fall.
    6. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
    7. Smith, James P & Welch, Finis R, 1989. "Black Economic Progress after Myrdal," Journal of Economic Literature, American Economic Association, vol. 27(2), pages 519-64, June.
    8. Caroline M. Hoxby & Bridget Terry, 1999. "Explaining Rising Income and wage Inequality Among the College Educated," NBER Working Papers 6873, National Bureau of Economic Research, Inc.
    9. Amitabh Chandra, 2003. "Is the Convergence of the Racial Wage Gap Illusory?," NBER Working Papers 9476, National Bureau of Economic Research, Inc.
    10. Eric A. Hanushek, 2001. "Black-White Achievement Differences and Governmental Interventions," American Economic Review, American Economic Association, vol. 91(2), pages 24-28, May.
    11. 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.
    12. Jane Sneddon Little & Robert K. Triest, 2002. "The impact of demographic change on U. S. labor markets," New England Economic Review, Federal Reserve Bank of Boston, issue Q 1, pages 47 - 68.
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