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"Soft" Skills, "Hard" Skills, and the Black/White Earnings Gap

  • Fan, C. Simon

    ()

    (Lingnan University)

  • Wei, Xiangdong

    ()

    (Lingnan University)

  • Zhang, Junsen

    ()

    (Chinese University of Hong Kong)

This paper provides both a theoretical and an empirical investigation into the impact of job skill types on the black/white pay differentials. The theoretical analysis derives that the more intensively "soft"/"hard" skills are used in an occupation, the greater/smaller the black/white pay differential is there in that occupation. Moreover, in response to the differential pay gaps across jobs requiring different levels of "soft"/"hard" skills, blacks are more likely to self-select themselves into the jobs that use "hard" skills more intensively, ceteris paribus. Using NLSY data, we find consistent empirical evidence to our theoretical predictions. Hence, the paper bridges the existing literature on racial pay gaps and cognitive vs. non-cognitive skills by explicitly testing the impact of job skill types on racial pay gaps.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1804.

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Length: 25 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:iza:izadps:dp1804
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  1. Nicola Persico & Andrew Postlewaite & Dan Silverman, 2004. "The Effect of Adolescent Experience on Labor Market Outcomes: The Case of Height," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 1019-1053, October.
  2. Stephen V. Cameron & James J. Heckman, 2001. "The Dynamics of Educational Attainment for Black, Hispanic, and White Males," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 455-499, June.
  3. Carneiro, Pedro & Heckman, James J & Masterov, Dimitriy V, 2005. "Labor Market Discrimination and Racial Differences in Premarket Factors," Journal of Law and Economics, University of Chicago Press, vol. 48(1), pages 1-39, April.
  4. 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.
  5. Jeff E. Biddle & Daniel S. Hamermesh, 1995. "Beauty, Productivity and Discrimination: Lawyers' Looks and Lucre," NBER Working Papers 5366, National Bureau of Economic Research, Inc.
  6. Stephen V. Cameron & James J. Heckman, 1991. "The Nonequivalence of High School Equivalents," NBER Working Papers 3804, National Bureau of Economic Research, Inc.
  7. Sawhill, Isabel V, 1988. "Poverty in the U.S.: Why Is It So Persistent?," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1073-119, September.
  8. H. J. Holzer & K. R. Ihlanfeldt, . "Customer Discrimination and Employment Outcomes for Minority Workers," Institute for Research on Poverty Discussion Papers 1122-97, University of Wisconsin Institute for Research on Poverty.
  9. Green, Francis & Machin, Stephen & Wilkinson, David, 1998. "The Meaning and Determinants of Skills Shortages," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(2), pages 165-87, May.
  10. Yona Rubinstein & James J. Heckman, 2001. "The Importance of Noncognitive Skills: Lessons from the GED Testing Program," American Economic Review, American Economic Association, vol. 91(2), pages 145-149, May.
  11. David Autor & Frank Levy & Richard Murnane, 2003. "The skill content of recent technological change: an empirical exploration," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  12. Coate, Stephen & Loury, Glenn C, 1993. "Will Affirmative-Action Policies Eliminate Negative Stereotypes?," American Economic Review, American Economic Association, vol. 83(5), pages 1220-40, December.
  13. John Cawley & James Heckman & Edward Vytlacil, 1998. "Meritocracy in America: An Examination of Wages Within and Across Occupations," NBER Working Papers 6446, National Bureau of Economic Research, Inc.
  14. Lundberg, S. & Startz, R., 1992. "On the Persistence of Racial Inequality," Discussion Papers in Economics at the University of Washington 92-04, Department of Economics at the University of Washington.
  15. 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 340-47, June.
  16. Chiswick, Barry R, 1988. "Differences in Education and Earnings across Racial and Ethnic Groups: Tastes, Discrimination, and Investments in Child Quality," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 571-97, August.
  17. Lang, Kevin, 1986. "A Language Theory of Discrimination," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 363-82, May.
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