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Higher quality 6" x 9” black and white photographic prints are available for any photographs or illustrations appearing in this copy for an additional charge. Contact UMI directly to order. ProQuest Information and Learning 300 North Zeeb Road, Ann Arbor, MI 48106-1346 USA 800-521-0600 UM] ® DETERMINANTS OF THE EARNINGS GAP BETWEEN BLACKS AND WHITES: A HUMAN CAPITAL APPROACH by James Goldenberg Bachelor of Science DePaul University 1993 Masters of Science University of Loyola Chicago 1998 A thesis submitted in partial fulfillment of the requirements for the Master of Arts Degree Department of Economics College of Business Graduate College University of Nevada Las Vegas August 2001 UMI Number: 1406397 UMI ® UMI Microform 1406397 Copyright 2002 by Bell & Howell Information and Learning Company. All rights reserved.
This microform edition is protected against unauthorized copying under Title 17, United States Code. Bell & Howell Information and Learning Company 300 North Zeeb Road P. Box 1346 Ann Arbor, Mi 48106-1346 Copyright by James Goldenberg 2001 All Rights Reserved Thesis Approval The Graduate College University of Nevada, Las Vegas MARCH 30 2l The Thesis prepared by James M. Goldenberg Entitled Determinants of the Earnings Gap Between Blacks and Whites: A Human _Capital Approach is approved in partial fulfillment of the requirements for the degree of Masters of Arts in Economics Examinatfon Conumittee Chatr Dean of the Graduate College va.
vxk^ nba Carirtber T2 s—eserea ki S2 (Cá k(Gê Meee ye AWe OR ENG Be CIE HORE ~ PR/1017.53/1-00 li ABSTRACT Determinants of the Earnings Gap Between Blacks and Whites: A Human Capital Approach By James Goldenberg Dr. Dejeto Assane Professor of Economics University of Nevada Las Vegas The persistence of wage differences between blacks and whites has provided economists a perplexing topic for debate. It has been proposed that this gap can be attributed in great part to a disparity in educational attainment between the two groups. This study looks specifically at whether a college degree diminishes the wage differential.
The empirical findings suggest that although a higher level of education increases the average wage for both blacks and whites it does not diminish the wage differential between the two groups. The results also reveal the possibility that the wage gap is in part due to the persistence of racial discrimination. iii TABLE OF CONTENTS ABS | RAC I PEPER ER REDE EHECH ERATURE THIER ER HU HEURES APR EUEH TEES POPE HERE REE EREM PEON PERO ED EO HED .exeseeseeseeee TT LIST OF FIGURES. PH OP TOOT RET RHR FENEEPHRPED EER EEHHE HENS *t#ddtrexvededydeeevdecSevhsdseveseeew aves.
*tevkeo@cve#wx+wevseeo ¥ ` ACKNOWLEDGEMENTS, .cecccesesteseesecscnestsesessseenssnenenseneenensenss wa vereraenaes se» VỊ CHAPTER 1 INTRODUCTION. er ber eeerae „.«_«e l CHAPTER 2 HISTORY AND LITERATURE. s“#et*aevơrtwevhdcswsesseve evareceverteor Historical ExperienC€. PT EPEC OTe Rene 2021200118011) 0N.
PORTE CR HUT HE DEVE O REE 8 CHAP I ER 3 MODEL POORER EER PERE RPE RET RPP TREE PER EERHEE DEDEDE EDEDETHETATNETRITAE TA ESE TES ehevarvareses vee 18 CHAPTER 4 ECONOMETIC RESULTS. PERO RPE A PERSE DH RD EO REO HER Tr aoe mere erod vee al Major Findings of the Empirical Results.eerrrrrrie en rec rennased vee 32 Decomposition. TROPA TERROR AERO LE TREE EERE EE ERP EOE REM RHE OER REREE PENH E ROE RH ORE REED eu veusesraeree woe 3d CHAPTERS CONCLUSION. co eereieriee Ree newnereens vee 3D API ENDICES PURPORT REDE HEARED PER TED ERFPER EER EEPERFENSE REE HEED ESTER ES SVRTC HURST HU RPTAEH HTL E VERE ae v*à#%Skstsatsewhe%vk 4] REFERENCES PRUE OE URE RETESET RETR EER EEE PRE TROUPE ELH TERE EPERESPHEOHIPERHREE PHD REREEREE DE OD .e CREEPER REEDED44 v Ị Ĩ A BPO R REPEC RE RES PERO HPO ROH ES ERH EMER SEEDED PEDERPERSEDSERER DE UST UST ET VS UA ERE VATE FUER EEE HEU HE LAO UE Renderer eseroevans 46 LIST OF TABLES TABLE ì Definition of Variables.
cà c1 xe 19 TABLE 2a Means and Standard Deviations for variables in study. 22 TABLE 2b Means and Standard Deviations by education. 23 TABLE 3 OLS Regression Resulls.eeneerue 28 TABLE 4 OLS Estimates by educational attainment. 30 TABLE 5 OLS Estimates of the Effects of Education and Race.
36 TABLE 7 Decomposition of the black-white wage gap. 38 ACKNOWLEDGEMENTS For their continued support and assistance, the author would like to thank: Djeto Assane, Benjamin Blair, Thomas Carroll, Shelley Franken, Earl and Maxine Goldenberg, Lewis Karstensson, Mohammed Kaseko, Katherine Lee, Bernard Malamud, Michael Moore, Bill Robinson, Alan Schlottmann, and Jeff Waddoups. VI CHAPTER | INTRODUCTION Earnings differences between blacks and whites have been a prominent feature of the American economic experience. In 1995, for example, the median income of black families was $25,970 while the comparable figure for white families was $42,646 — a difference of some $16,600.
Black families in 1995, in other words, received about 61 percent of the income of their counterpart white families.’ In an attempt to explain why such a difference exists this study focuses on the relationship between earnings and levels of educational attainment. In particular, it addresses whether receipt of a baccalaureate education among blacks has an effect on the black-white earnings differential. This matter is investigated using multiple regression analysis of 41,168 individuals reported in the National Bureau of Economic Research’s extract of Current Population Survey Outgoing Rotation Group, 1996. The measurement of the black-white earnings differential as it relates to educational attainment is important for two reasons.
First, it affords a quantitative look at the magnitude of the earnings disparity between blacks and whites. Second, it highlights the importance of the role of education in eliminating the earnings gap. If the results of the study show that the achievement of bachelor’s degree clearly reduces the eamings differential then public policies directed toward reducing the gap can focus on how to vd allow more individuals the opportunity to pursue higher education. If however, it is revealed that despite the increased levels of education the earnings gap still exists, then policy can be aimed at other factors that might be the cause.
The remainder of this study is organized into four chapters. Chapter 2 contains a historical note on selected black experiences in the United States and a review of human capital (schooling) research on earnings differences. Chapter 3 includes a description of the data and models employed in the study. Chapter 4 presents the empirical results of the study.
Chapter 5 provides the summary and concluding remarks. Notes | Economic Report of the President Council of Economic Advisors 1997, Table B-3, P. CHAPTER 2 HISTORY AND LITERATURE REVIEW This chapter focuses on two background matters related to this study. The first is a comment on the historical experience of blacks in the United States, which reveals a pattern of separation and discrimination resulting in economic and social differences between themselves and whites.
The second is a review of human capital research related to earnings differences and education. Historical Experience The social and economic progression of blacks in this country has been obstructed by mistreatment that can be traced from their existence as slaves to the racism and bigotry they face in today’s society. From the post Civil War tyranny of Jim Crow laws, through Supreme Court decisions upholding segregation, and violent clashes of the civil rights movement, blacks have faced barriers that deprived them of opportunities for advancement. The result of these deterrents can be observed in earnings discrepancies among blacks and whites as well as differences in attainment of education.
The saga of the black existence in the United States began in 1619 when Dutch seamen brought twenty blacks to Jamestown, Virginia (Webster, p. This event marked the beginning of slavery in this country. It would not officially end until 1865. Over the two hundred forty year period that the institution existed, the number of blacks confined to slavery continued to grow.
By 1790, over 700,000 enslaved blacks were in the United States (Webster, p. In 1860 the slave population was estimated at nearly 4,000,000 (Webster, p. The end of the Civil War and the defeat of the South provided great hope for blacks. Most blacks had little wealth or education, but now it appeared that they would at least have the freedom to pursue a better life and the opportunities to achieve financial sovereignty.
The plans for the reconstruction of the South were supposed to provide a means for blacks to integrate into society, but they failed. Former slaves had difficulty finding jobs. Several groups tried to start their own businesses, but most were profitless due to a lack of experience. Blacks that had jobs, whether in the North or the South.
were nat paid the same wage as their white counterparts (Asante, p. As the country moved toward the turn of the century, the outlook for progress was bleak. In spite of the hardship, black leaders tried to create a positive attitude in the black community. They urged blacks to learn vocational skills and to educate themselves so they could compete with whites.
But these efforts were made difficult by continued racial prejudice. Trade unions refused to offer membership to blacks and many institutions of higher learning refused them admission. Without such opportunities, blacks continued to struggle. Economic and social progress was limited as blacks fought for an equal playing field.
The fight was dealt a serious blow in 1896 when the Supreme Court decision in Plessey v. Ferguson concluded that separate accommodations in public facilities were acceptable p as fone 8 as they y were equal.’ The negative 8 impact of the Plessey decision was apparent in the economic condition of blacks. Segregation extended into the workplace and coupled with the already established discrimination made it extremely difficult for blacks to get jobs. The jobs they were able to find mostly involved unskilled labor, working in unsafe environments for very little pay.
The country’s economy started to pick up in the 1920's but for blacks very little economic progress was made. When the depression hit, blacks, already on the bottom of the economic ladder, suffered greatly. During the depression era it was estimated that 65 to 80 percent of blacks were on relief rolls (Webster, p. By the end of Worid War II the country had managed to make it’s way out of the depression, but a larger battle was facing blacks, the fight for their civil nights.
In 1946, President Truman created the Committee on Civil Rights. At the urging of this Committee a series of legislative bills were drafted that pushed for equality between the races. Pressure was also placed on the judicial system to eradicate prejudices in the existing law. In 1954, the Supreme Court ruled in Brown v.
the Board of Education of Topeka that segregation could no longer be practiced. This ruling overturned the earlier Plessey decision. Segregation had been one of the major obstacles blocking the progress of blacks. The removal of this barrier catalyzed progress for blacks throughout the late fifties, sixties, and into the seventies.’ Enrollment at all levels of education went up for blacks.
