The Review of Black Political Economy

, Volume 13, Issue 4, pp 51–69 | Cite as

A comparative analysis of black-white and Mexican-American-White male wage differentials

  • Jeremiah Cotton


Wage Differential Average Wage Union Membership Wage Equation Annual Earning 
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  1. 1.
    See Walter Fogel, “The Effects of Low Educational Attainment on Incomes: A Comparative Study of Selected Ethnic Groups,”Journal of Human Resources, vol. 3 (Fall 1966), pp. 22–40. Sar A. Levitan,Human Resources in Labor Markets, New York: Harper & Row, 1976, chap. 19. J. Allen Williams, Peter G. Beeson, and David R. Johnson, “Some Factors Associated with Income Among Mexican-Americans,”Social Science Quarterly, vol. 4 (March 1973), pp., 710–715. Hugo Diaz-Etchevehere, “An Analysis of Earnings Differentials Between Anglos, Mexican-Americans and Blacks in Five Southwestern States,” Ph.D. dissertation, University of Wisconsin-Milwaukee, 1977. Fogel was the only one of these analysts to offer an explanation for why Mexican-Americans might be “preferred” to blacks: “With respect to discrimination, there are theoretical and empirical justifications for thinking that the connection between education and income varies among the disadvantaged minority groups because discrimination is greater against some than against others and thus affects the incremental income payoff from schooling in varying degrees. The “visible dissimilarity” proposition of race relations sociology suggests that,ceteris paribus, the rate of assimilation of an ethnic group into the host society is more rapid the greater the physical similarity between its members and persons of the majority population” (op. cit., p. 24).CrossRefGoogle Scholar
  2. 2.
    In defense of Jacob Mincer’s use of annual earnings as a dependent variable, Blinder notes that hours of work for prime age males is nearly constant at 2,000 hours per year since they “suffer little unemployment and rarely withdraw from the labor force.” Therefore little information is lost by using earnings since they are nearly proportional to the wage. However, while this assumption may be usefully applied to white males, it is much less valid for blacks and Mexican-Americans. See Alan S. Blinder, “On Dogmatism in Human Capital Theory,”Journal of Human Resources, vol. 11 (Winter 1976), p. 117, footnote 12.CrossRefGoogle Scholar
  3. 3.
    Alan S. Blinder, “Estimating a Micro Wage Equation: Pitfalls and Some Provisional Estimates,” Princeton University Econometric Research Program, Research Memorandum No. 131, November 1971.Google Scholar
  4. 4.
    Robert E. Hall, “Wages, Income and Hours of Work in the U.S. Labor Force,” inLabor Supply and Income Maintenance, ed. Glen Cain and Harold Watts, Chicago: Markham, 1973.Google Scholar
  5. 6.
    See Gary S. Becker,The Economics of Discrimination, 2nd ed., Chicago: University of Chicago Press, 1971; and Kenneth J. Arrow, “The Theory of Discrimination,” inDiscrimination in Labor Markets, ed. Orley Ashenfelter and Albert Rees, Princeton, N.J.: Princeton University Press, 1974, pp. 3–33.Google Scholar
  6. 7.
    The decomposition method derived here was made popular in the economics literature by Oaxaca and Blinder and in the sociology literature by Duncan and Althauser and Wigler. See Otis D. Duncan, “Inheritance of Poverty or Inheritance of Race?” inOn Understanding Poverty, ed. D.P. Moynihan, New York: Basic Books, 1968, pp. 85–105; Robert P. Althauser and Michael Wigler, “Standardization and Component Analysis,”Sociological Methods and Research, vol. 1 (August 1972), pp. 97–135; Ronald L. Oaxaca, “Male-Female Wage Differentials in Urban Labor Markets,”International Economic Review, vol. 14 (October 1973), pp. 693–709; Alan S. Blinder, “Wage Discrimination: Reduced Form and Structural Estimates,”Journal of Human Resources, vol. 8 (Fall 1973), pp. 436–455.Google Scholar
  7. 8.
    This seems plausible since blacks constitute a relatively small percentage of the total population. The impact of eliminating differential treatment will not greatly increase the labor supply in the “white” labor market. Bergmann concluded that “for the great majority of whites the end of discrimination would have only a minor effect on rates of pay. Those whites in the lowest educational bracket would bear the brunt of the change.” Barbara Bergmann, “The Effect on White Incomes of Discrimination in Employment,”Journal of Political Economy, vol. 79 (March/April 1971), p. 310.CrossRefGoogle Scholar
  8. 9.
    See Zvi Griliches and William Mason, “Education, Income and Ability,”Journal of Political Economy, vol. 80 (May–June 1972), Supplement; and Stanley Masters,Black-White Income Differentials, New York: Academic Press, 1975; see also George Johnson and Frank Stafford, “Social Returns to Quantity and Quality of Schooling,”Journal of Human Resources, vol. 8 (Summer 1973), pp. 139–155.Google Scholar
  9. 10.
    For a critical analysis of the methodology underlying the formation of the residual and its interpretation as a measure of discrimination, see Richard J. Butler, “Estimating Wage Discrimination in the Labor Market,”Journal of Human Resources, vol. 17 (Fall 1982), pp. 606–621.CrossRefGoogle Scholar
  10. 12.
    See R. Halvorsen and R. Palmquist, “The Interpretation of Dummy Variables in Semilogarithmic Equations,”American Economic Review, vol. 70 (June 1980), pp. 474–475.Google Scholar
  11. 15.
    An expression using the black coefficients could have also been used. However, it presents some difficulties for interpreting the residual. See Jeremiah Cotton, “A Comparative Analysis of the Determinants of Black-White and Mexican-American-White Male Wage Differentials,” Ph.D. diss., University of Michigan, 1983.Google Scholar
  12. 16.
    In 3-group comparisons, Diaz and Williams et al. attributed 17% and 25%, respectively, of the earnings gap to black-white schooling differences. In 2-group black-white comparisons, Gwartney put it at 21 % to 28%; Blinder found 15%; Masters 10% to 20%; and Corcoran and Duncan attributed almost as much as did the present study, 38% to 43%. Diaz, op. cit.; Williams et al., op. cit.; Blinder, “Wage Discrimination”; Masters, op. cit.; James Gwartney, “Discrimination and Income Differentials,”American Economic Review, vol. 60 (June 1970), pp. 396–408; Mary Corcoran and Greg J. Duncan, “Work History, Labor Force Attainment, and Earnings Differences Between the Races and Sexes,”Journal of Human Resources, vol. 14 (Winter 1979), pp. 1–20.Google Scholar
  13. 17.
    See James P. Smith and Finis Welch, “Black-White Male Wage Ratios: 1960–1970,”American Economic Review, vol. 67 (June 1977), pp. 323–338; idem, “Race Differences in Earnings: A Survey and New Evidence,” The Rand Corporation, R-2295-NSF, March 1978.Google Scholar

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© Springer 1985

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  • Jeremiah Cotton

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