Can the "one-drop rule" tell us anything about racial discrimination? New evidence from the multiple race question on the 2000 Census

The inclusion of multiple race information for the first time in the 2000 Census allows for a novel test for the presence of labor discrimination using the "one-drop rule." Identifying discrimination is straightforward and essentially relies on the discontinuous nature of the one-drop rule, which treats biracial blacks similarly as monoracial blacks. If biracial blacks have levels of unmeasurable and measurable human capital that lie between the levels of monoracial blacks and whites then, absent discrimination, their wages should also lie between the wages of the two groups. Estimates from the Census indicate that biracial blacks have levels of education that lie almost perfectly between monoracial blacks and whites. In contrast, however, biracial blacks have wages that are roughly similar to monoracial blacks after controlling for education and potential work experience. Estimates from the 1980 Census also do not indicate that the parental characteristics and educational outcomes of biracial children differ from what would be expected by having both black and white parents. Several additional factors that potentially affect the human capital of biracial adults are explored. These findings provide some suggestive evidence on the "one drop rule" and the presence of discrimination in the labor market and provide new estimates of wages and educational levels of biracial blacks.