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Eliminating Race Differences in School Attainment and Labor Market Success

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Between 1940 and 1980, the average school attainment of black men increased by about 1.5 years every decade, about .5 years more than for white men. Similarly, over the same period real income more than quadrupled for black men, while increasing two-and-one-half times for white men. However, considerable differences remain. In 1993, the percent of 25 to 29 year old black males who were college graduates was only half that of white males of the same age (12.6 percent relative to 24.4 percent) and earnings among 25 to 34 year old black males were only 83 percent of that of white males of the same age. This paper structurally estimates a dynamic model of schooling, work and occupational choice decisions over the life cycle that is capable of distinguishing between a number of possible explanations for the current disparities in schooling and earnings and that also permits an evaluation of the potential success of alternative interventions that might be used to equalize differences in schooling and labor market outcomes. We particularly consider the issue of the responsiveness of black male youths to monetary school performance-based incentives. We show that a relatively modest incentive scheme, providing separate bonuses for high school and college graduation, can induce a substantial response in black school attainment that leads to a near equalization in the school attainment distributions of blacks and whites.

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  • Michael P. Keane & Kenneth Wolpin, "undated". "Eliminating Race Differences in School Attainment and Labor Market Success," CARESS Working Papres 97-5, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  • Handle: RePEc:wop:pennca:97-5
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    1. 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, pages 1603-1643.
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    Cited by:

    1. Petra Todd & Kenneth I. Wolpin, 2002. "Using a Social Experiment to Validate a Dynamic Behavioral Model of Child Schooling and Fertility: Assessing the Impact of a School Subsidy Program in Mexico," PIER Working Paper Archive 03-022, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Sep 2003.
    2. Belzil, Christian, 2007. "The return to schooling in structural dynamic models: a survey," European Economic Review, Elsevier, pages 1059-1105.
    3. Adda & Dustmann, 2004. "Career Progression and Formal versus on the Job Training," Econometric Society 2004 North American Winter Meetings 492, Econometric Society.
    4. Michael Keane, 2011. "Income Taxation in a Life Cycle Model with Human Capital," Working Papers 201117, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
    5. Rendon, Silvio, 2007. "Does Wealth Explain BlackWhite Differences in Early Employment Careers?," Journal of Business & Economic Statistics, American Statistical Association, pages 484-500.
    6. Dionissi Aliprantis, 2011. "Assessing the evidence on neighborhood effects from moving to opportunity," Working Paper 1101, Federal Reserve Bank of Cleveland.
    7. José Mustre-del-Río, 2011. "The aggregate implications of individual labor supply heterogeneity," Research Working Paper RWP 11-09, Federal Reserve Bank of Kansas City.
    8. Angrist, Joshua & Lavy, Victor, 2002. "The Effect of High School Matriculation Awards: Evidence from Randomized Trials," CEPR Discussion Papers 3827, C.E.P.R. Discussion Papers.
    9. Belzil, Christian & Poinas, François, 2010. "Education and early career outcomes of second-generation immigrants in France," Labour Economics, Elsevier, pages 101-110.
    10. Gabin Langevin & David Masclet & Fabien Moizeau & Emmanuel Peterlé, 2013. "Educational Attainment, Wages and Employment of Second-Generation Immigrants in France," CIRANO Working Papers 2013s-33, CIRANO.
    11. Kenneth I. Wolpin & Petra E. Todd, 2006. "Assessing the Impact of a School Subsidy Program in Mexico: Using a Social Experiment to Validate a Dynamic Behavioral Model of Child Schooling and Fertility," American Economic Review, American Economic Association, vol. 96(5), pages 1384-1417, December.
    12. Riddell, Chris & Riddell, W. Craig, 2014. "The pitfalls of work requirements in welfare-to-work policies: Experimental evidence on human capital accumulation in the Self-Sufficiency Project," Journal of Public Economics, Elsevier, pages 39-49.
    13. Dionissi Aliprantis, 2012. "When should children start school?," Working Paper 1126, Federal Reserve Bank of Cleveland.
    14. repec:spr:empeco:v:53:y:2017:i:3:d:10.1007_s00181-016-1160-y is not listed on IDEAS
    15. van der Klaauw, Wilbert & Wolpin, Kenneth I., 2008. "Social security and the retirement and savings behavior of low-income households," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 21-42, July.
    16. Michael P. Keane, 2002. "Financial Aid, Borrowing Constraints, and College Attendance: Evidence from Structural Estimates," American Economic Review, American Economic Association, vol. 92(2), pages 293-297, May.
    17. Michael P. Keane, 2015. "Effects Of Permanent And Transitory Tax Changes In A Life‐Cycle Labor Supply Model With Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 485-503, May.
    18. Angrist, Joshua & Lavy, Victor, 2004. "The Effect of High Stakes High School Achievement Awards: Evidence from a School-Centered Randomized Trial," IZA Discussion Papers 1146, Institute for the Study of Labor (IZA).
    19. Keane, Michael P., 2010. "Structural vs. atheoretic approaches to econometrics," Journal of Econometrics, Elsevier, vol. 156(1), pages 3-20, May.
    20. Eckel, Catherine & Johnson, Cathleen & Montmarquette, Claude, 2013. "Human capital investment by the poor: Informing policy with laboratory experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 224-239.
    21. Michael P. Keane & Kenneth I. Wolpin, 2009. "Empirical Applications of Discrete Choice Dynamic Programming Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(1), pages 1-22, January.
    22. Keane, Michael P. & Todd, Petra E. & Wolpin, Kenneth I., 2011. "The Structural Estimation of Behavioral Models: Discrete Choice Dynamic Programming Methods and Applications," Handbook of Labor Economics, Elsevier.
    23. Gabin Langevin & David Masclet & Fabien Moizeau & Emmanuel Peterle, 2017. "Ethnic Gaps in Educational Attainment and Labor-Market Outcomes: Evidence from France," TEPP Working Paper 2017-07, TEPP.
    24. Peter Arcidiacono & Robert A. Miller, 2011. "Conditional Choice Probability Estimation of Dynamic Discrete Choice Models With Unobserved Heterogeneity," Econometrica, Econometric Society, vol. 79(6), pages 1823-1867, November.
    25. Joshua Angrist & Victor Lavy, 2003. "Achievement awards for high school matriculation: Evidence from randomized trials," Natural Field Experiments 00202, The Field Experiments Website.

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