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Labor Market Dropouts and Trends in the Wages of Black and White Men

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  • Chinhui Juhn

Abstract

There is continuing debate over whether and to what degree estimations of black-white wage convergence are biased because they leave labor market dropouts out of the picture. If a high proportion of blacks become discouraged and cease searching for jobs, and if those dropouts have, on average, poor job prospects, the average wage of black workers who remain in the labor market will be an upwardly biased estimate of the average wage across the population. This paper introduces a simple method of imputing wages to non-workers. When non-workers are accounted for in the calculations, real wage growth for prime age black men over the 1969–98 period is reduced approximately 40%, and black-white wage convergence is reduced by approximately one-third. The author finds that a source of bias as important as falling employment rates is the growing gap between wages of workers and potential wages of non-workers.

Suggested Citation

  • Chinhui Juhn, 2003. "Labor Market Dropouts and Trends in the Wages of Black and White Men," ILR Review, Cornell University, ILR School, vol. 56(4), pages 643-662, July.
    • Handle: RePEc:sae:ilrrev:v:56:y:2003:i:4:p:643-662
    DOI: 10.1177/001979390305600406
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    References listed on IDEAS

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    Cited by:

    1. Stevans, Lonnie, 2007. "The Relationship Among African American Male Earnings, Employment, Incarceration and Immigration: A Time Series Approach," MPRA Paper 5594, University Library of Munich, Germany.
    2. D’Haultfœuille, Xavier & Maurel, Arnaud & Zhang, Yichong, 2018. "Extremal quantile regressions for selection models and the black–white wage gap," Journal of Econometrics, Elsevier, vol. 203(1), pages 129-142.
    3. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 37-89.
    4. Richard Burkhauser & Jeff Larrimore, 2008. "Using Internal Current Population Survey Data to Reevaluate Trends in Labor Earnings Gaps by Gender, Race, and Education Level," Working Papers 08-18, Center for Economic Studies, U.S. Census Bureau.
    5. Limor Golan & Carl Sanders & Jonathan James, 2019. "What Explains the Racial Gaps in Task Assignment and Pay Over the Life-Cycle?," 2019 Meeting Papers 320, Society for Economic Dynamics.
    6. Xavier D’Haultfoeuille & Arnaud Maurel & Xiaoyun Qiu & Yichong Zhang, 2020. "Estimating selection models without an instrument with Stata," Stata Journal, StataCorp LP, vol. 20(2), pages 297-308, June.
    7. Sloczynski, Tymon, 2018. "Average Gaps and Oaxaca's Blinder Decompositions: A Cautionary Tale about Regression Estimates of Racial Differences in Labor Market Outcomes," IZA Discussion Papers 12041, Institute of Labor Economics (IZA).
    8. Barry T. Hirsch & John V. Winters, 2014. "An Anatomy Of Racial and Ethnic Trends in Male Earnings in the U.S," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(4), pages 930-947, December.
    9. Albrecht, James & van Vuuren, Aico & Vroman, Susan, 2015. "The black–white wage gap among young women in 1990 vs. 2011: The role of selection and educational attainment," Labour Economics, Elsevier, vol. 33(C), pages 66-71.
    10. Eric D. Gould, 2021. "Torn Apart? The Impact of Manufacturing Employment Decline on Black and White Americans," The Review of Economics and Statistics, MIT Press, vol. 103(4), pages 770-785, October.
    11. George J. Borjas & Jeffrey Grogger & Gordon H. Hanson, 2006. "Immigration and African-American Employment Opportunities: The Response of Wages, Employment, and Incarceration to Labor Supply Shocks," NBER Working Papers 12518, National Bureau of Economic Research, Inc.
    12. George J. Borjas & Jeffrey Grogger & Gordon H. Hanson, 2010. "Immigration and the Economic Status of African‐American Men," Economica, London School of Economics and Political Science, vol. 77(306), pages 255-282, April.
    13. Ahmed, Salma, 2015. "Dynamics and diversity: How are religious minorities faring in the labour Market in Bangladesh?," MPRA Paper 75153, University Library of Munich, Germany, revised 18 Nov 2016.
    14. Vilsa E. Curto & Roland G. Fryer Jr., 2014. "The Potential of Urban Boarding Schools for the Poor: Evidence from SEED," Journal of Labor Economics, University of Chicago Press, vol. 32(1), pages 65-93.

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