The effect of race on earnings in the United States

Abstract

Most studies that have examined the effect of race on earnings in the United States have used aggregated data. This often obscures as much as it reveals.This article computes white-black earnings differentials for a number of relatively narrow groups, and finds that the earnings gap varies considerably across them. By using recent data from 1987, the study also updates earlier estimates of racial differentials. The use of Cotton and Neumark's modified version of the widely used Oaxaca technique, and Heckman's corrections for selectivity bias strengthen the methodological underpinnings of the model, and constitute improvement over previous work.