Working Paper: NBER ID: w3778
Authors: John Bound; Richard B. Freeman
Abstract: This paper shows a widening in black-white earnings and employment gaps among young men from the mid-l970s through the 1980s that differs among subgroups. Earnings gaps increased most among college graduates and in the midwest while gaps in employment-population rates grew most among high school dropouts. We attribute the differential widening to distinct shifts in demand for subgroups due to changes in industry and regional employment, the falling real minimum wage and deunionisation, the growth of the relative supply of black to white workers that was marked among college graduates, and to increased crime, that was marked among high school dropouts. The differential factors affecting the groups highlights the economic diversity of black Americans.
Keywords: black-white earnings gap; employment disparities; affirmative action; labor market; socioeconomic factors
JEL Codes: J15; J31; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| shifts in demand for specific groups (J20) | influenced by economic decline, changes in industry, falling real minimum wage, and increased crime (F66) |
| widening racial earnings gap among young black men from 1976 to 1989 (J79) | distinct shifts in demand for subgroups (R22) |
| economic decline of inner cities and loss of manufacturing jobs (R23) | erosion of relative earnings among those with less education (I24) |
| increased crime rates and joblessness among high school dropouts (I21) | declining employment rates for this group (J79) |
| growing ratio of black to white college graduates (J79) | decline in relative earnings for black college graduates (J79) |
| decline in relative employment rates for young black men (J79) | cannot be explained by selectivity (C69) |