RT Journal Article
SR Electronic
T1 Racial Labor Market Gaps
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 919
OP 971
DO 10.3368/jhr.43.4.919
VO 43
IS 4
A1 Urzúa, Sergio
YR 2008
UL http://jhr.uwpress.org/content/43/4/919.abstract
AB 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.