TY - JOUR T1 - Racial Labor Market Gaps JF - Journal of Human Resources JO - J Hum Resour SP - 919 LP - 971 DO - 10.3368/jhr.43.4.919 VL - 43 IS - 4 AU - Sergio Urzúa Y1 - 2008/10/02 UR - http://jhr.uwpress.org/content/43/4/919.abstract N2 - This paper studies the relationship between abilities, schooling choices, and black-white differentials in labor market outcomes. The analysis is based on a model of endogenous schooling choices. Agents’ schooling decisions are based on expected future earnings, family background, and unobserved abilities. Earnings are also determined by unobserved abilities. The analysis distinguishes unobserved abilities from observed test scores. The model is implemented using data from the NLSY79. The results indicate that, even after controlling for abilities, there exist significant racial labor market gaps. They also suggest that the standard practice of equating observed test scores may overcompensate for differentials in ability. ER -