Race Differences in Earnings: A Survey and New Evidence.

by James P. Smith, Finis Welch

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Explores five possible explanations for the recent convergence in black-white earnings ratios: (1) a convergence in black and white income-producing characteristics; (2) a cohort or "vintage" improvement among blacks; (3) the effects of migration; (4) the effects of government affirmative action and reduction in labor market discrimination; and (5) business cycle variation. The principal explanation given here for the improved economic status of blacks is that successive cohorts of blacks and whites are simply becoming more alike in those attributes producing higher wages. The report is based on a statistical analysis of eight Current Population Surveys for 1968 through 1975, each dataset containing approximately 40,000 people. Thus eight successive cross-sections are used to distinguish cohort and life cycle effects. The weight of evidence supports cohort improvement rather than the life cycle view. 69 pp. Bibliog.

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