Educational Achievement and Black-White Inequality
By Jonathan Jacobsen, Cara Olsen, Jennifer Kinq Rice, Stephen Sweetland, and John Ralph
National Center for Education Statistics, July 2001.
Through the 1960s, African-Americans earned much less than whites--even when their cognitive abilities (as measured by test scores) were similar. By the end of the century, however, many believed that employment discrimination had attenuated to such a degree that the gap in labor-market outcomes could be explained almost entirely by differences in test scores. Consequently, reducing the well-known gap between the test scores of black and white students is now seen as an important way to reduce economic and other forms of inequality. In response, the U.S. Department of Education's National Center for Education Statistics commissioned Mathemarica Policy Research, a contract research firm, to find out whether 1) employers are now playing fair and 2) schools are doing their part in narrowing the black-white testscore gap. Accepting the challenge, Jonathan Jacobsen and his colleagues discovered that the answer to the first of these questions was both more hopeful and much easier to provide.
Few dispute the dreadful state of affairs that existed in the 1960s. One study found that the black-white gap in scores on the Armed Forces Qualifying Test in 1964 could account for only a quarter of the difference in wages between black men and white men. Quite clearly, widespread racial discrimination helped create a labor market that yielded fewer rewards for blacks than for whites of similar ability. In addition, many jobs did not require a high level of cognitive skill.
Today, cognitive skills and educational credentials are more valuable for workers in part because of changes in production technologies that demand more highly skilled employees. Moreover, the civil-rights legislation of the 1960s and 1970s seems to have caused discrimination in employment to decline. As a result, the black-white gap in academic achievement now seems to account for a sizable share of the black-white gap in wages.
Whether the gap in labor-market outcomes has virtually disappeared depends on how it is measured. In a widely cited 1996 study, economists Derek Neal and William Johnson showed that if test scores are not taken into account, white men's wages are 24 to 28 percent higher than those of black men. But these raw differences narrow substantially when differences in test scores are accounted for. Neal and Johnson, using data from the National Longitudinal Survey of Youth begun in 1979, showed that white men earned hourly wages that are only 7 to 10 percent more than black men with similar scores on the Armed Forces Qualifying Test. However, the gap in annual earnings between white men and black men with similar scores was about three times as large (roughly 30 percent), This is because white men are less likely to be unemployed, work longer hours on average, and are on the job more days of the year. Among women, wages and earnings were actually somewhat higher for blacks than for whites with similar test scores.
Using data from a variety of sources, including the National Longitudinal Survey of Youth, the High School and Beyond study, and the National Longitudinal Study of the High School Class of 1972, Jacobsen and his colleagues at Mathematica essentially confirm Neal and Johnson's findings, providing additional evidence that most of the remaining wage gap is due to differences in cognitive skills, as measured by test scores.
In the Jacobsen study, the hourly wages, employment rates, and annual earnings of black women were at least as high as those of white women with similar test scores and family backgrounds. The researchers also found that black and white men with similar scores and family backgrounds had similar wages and, contrary to the findings of Neal and Johnson, generally experienced similar employment rates and annual earnings as well. …