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The Role of Premarket Factors in Black-White Wage Differences


  • Neal, Derek A
  • Johnson, William R


The authors regress young adult wages on current age and the score of a basic skills test that was administered over ten years earlier, when respondents were preparing to leave high school and embark on work careers or postsecondary education. Controlling for this one measure of premarket skill greatly reduces the measured black-white wage gap for young adults. The authors' results suggest that the black-white wage gap primarily reflects a black-white skill gap that exists before young men and women enter the labor market. This skill gap in part reflects measured black-white differences in wealth and family background. Copyright 1996 by University of Chicago Press.

Suggested Citation

  • Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
  • Handle: RePEc:ucp:jpolec:v:104:y:1996:i:5:p:869-95

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    References listed on IDEAS

    1. Blau, Francine D & Beller, Andrea H, 1992. "Black-White Earnings over the 1970s and 1980s: Gender Differences in Trends," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 276-286, May.
    2. John Bound & David A. Jaeger & Regina Baker, 1993. "The Cure Can Be Worse than the Disease: A Cautionary Tale Regarding Instrumental Variables," NBER Technical Working Papers 0137, National Bureau of Economic Research, Inc.
    3. David Card & Alan B. Krueger, 1992. "School Quality and Black-White Relative Earnings: A Direct Assessment," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 151-200.
    4. John Bound & Richard B. Freeman, 1992. "What Went Wrong? The Erosion of Relative Earnings and Employment Among Young Black Men in the 1980s," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 201-232.
    5. Donohue, John J, III & Heckman, James, 1991. "Continuous versus Episodic Change: The Impact of Civil Rights Policy on the Economic Status of Blacks," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1603-1643, December.
    6. 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.
    7. Mary Corcoran & Greg J. Duncan, 1979. "Work History, Labor Force Attachment, and Earnings Differences between the Races and Sexes," Journal of Human Resources, University of Wisconsin Press, vol. 14(1), pages 3-20.
    8. Michael A. Boozer & Alan B. Krueger & Shari Wolkon, 1992. "Race and School Quality Since Brown vs. Board of Education," Working Papers 681, Princeton University, Department of Economics, Industrial Relations Section..
    9. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    10. Murnane, Richard J & Willett, John B & Levy, Frank, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 251-266, May.
    11. Lundberg, Shelly J & Startz, Richard, 1983. "Private Discrimination and Social Intervention in Competitive Labor Markets," American Economic Review, American Economic Association, vol. 73(3), pages 340-347, June.
    12. O'Neill, June, 1990. "The Role of Human Capital in Earnings Differences between Black and White Men," Journal of Economic Perspectives, American Economic Association, vol. 4(4), pages 25-45, Fall.
    13. Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-579, November.
    14. anonymous, 1991. "Regional economic development and public policy," Monograph, Federal Reserve Bank of Kansas City, number 1991redap, Jan 17.
    15. Joshua D. Angrist & Alan B. Keueger, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 979-1014.
    16. Nan L. Maxwell, 1994. "The Effect on Black-White Wage Differences of Differences in the Quantity and Quality of Education," ILR Review, Cornell University, ILR School, vol. 47(2), pages 249-264, January.
    17. Grogger, Jeff, 1996. "Does School Quality Explain the Recent Black/White Wage Trend?," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 231-253, April.
    18. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
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    More about this item

    JEL classification:

    • 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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