The Role Of Premarket Factors In Black-White Wage Differences
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AFQT scores explain racial wage gaps: Test accounts for 75% male gap, 100% female gap vs education levels. Skills deficit, not schooling, drives black-white earnings differential.
Derek Neal and William Johnson, “The Role Of Premarket Factors In Black-White Wage Differences,” The Journal of Political Economy, October 1996, https://www.nber.org/papers/w5124
They view education as a“noisy measure of workers skill because it measures an input, not an outcome”which is a good turn of phrase
This paper from 1996 looks at the covariance issue and finds that the AFQT is the variable that matters“we find that this one test score explains all of the black-white wage gap for young women and much of the gap for young men. For today’s young adults, the black white wage gap primarily reflects a skill gap”
Ed Comment:It’s too bad they only look at the correlation between family income and test scores rather than the predictability of a child’s income using their test score AND their parents income. Because test score shows little gap, between blacks and white, my guess is that using both will show even less of a gap. However, they show that for a given family income, black children score lower. If a child’s score is indicative of their parent’s, then black parent seem to out earn white parents for a given score, at least for their child’s score. That suggests blacks out earn whites for given score, at least in the parent’s generation. Or oddly, that there is more of a downward trend between parents and their children for black relative to whites. If black parents our earn white for a given test score than if resources don’t contribute much beyond scores, add income will make blacks appear to be more discriminated against than not including it.