The Significance of Class in Earnings Inequality Between Black and White Men

• In Event: 4124 - Section on Race, Gender, and Class Roundtables
  In Refereed Roundtable (100 min): Table 2. Work/Workplace

Abstract

Despite the rich literature on racial economic inequality, the role of productive assets in closing black-white earnings gaps remains unclear. Using the Panel Study of Income Dynamics (PSID), this study attempts a systematic re-examination on this subject, which is characterized by three distinctive features: (1) it targets early-career earnings inequality, isolating the effects of pre-market productive assets from those developed during career growth; (2) it performs multi-cohort comparisons, expanding the temporal horizon of previous studies of single-cohort focuses; (3) from a perspective of productivity signaling, it evaluates black workers’ class-varying experiences during labor-market entry. The results show that, as a general pattern, black-white inequality in early-career earnings becomes less salient as one moves up the pre-market ladder of educational attainment, though an exception is found for the cohort who entered labor markets in the conservative era of the 1980s and early 1990s. Moreover, highly educated African Americans’ relative advantages over their less-educated peers are realized through the interplays between racial discrimination and productivity signaling – educational credentials exhibit a function of negating negative racial stereotypes. These findings reconcile conflicting evidence in the existing literature and point to a new policy direction toward racial economic equality.

Author

• Chunhui Ren, University of Cincinnati