The Racial Wage Gap

Abstract

Labor market attachment differs significantly across young black, Mexican, and white men. Although it has long been agreed that potential experience is a poor proxy for actual experience for women, many view it as an acceptable approximation for men. Using the NLSY, this paper documents the substantial difference between potential and actual experience for both black and Mexican men. We show that the fraction of the black/ white and Mexican/white wage gaps that are explained by differences in potential experience are quite different from the fraction of the racial wage gaps that are explained by actual (real) experience differences.