What does the AFQT really measure: Race, wages, schooling and the AFQT score The Review of Black Political Economy

“…Recent literature on the black-white wage gap continues to show that a large residual due to race remains, and during the 1980s it grew in size. One interpretation is that the residual gap measures the existence of labor market discrimination. Another interpretation is that imbedded in the residual gap are racial differences in unobservable skills that grew during the 1980s, or that racial differences in these skills remained constant, but their returns grew. To account for these unobservable skills, researchers use the National Longitudinal Survey of Youth (NLSY). The NLSY contains the Armed Forces Qualification Test (AFQT), a direct measure of skills obtained via family and school environments. When researchers include the AFQT composite score, the black-white wage gapnarrows. Doing this, they assume that the AFQT score is a racially unbiased predictor of wages. We present evidence that generates doubts that the AFQT score is racially unbiased. We first show that F-Tests reject the hypothesis that AFQT scores equally predict African American and white wages. Second, we show that a significant difference exists in the ability of variables representing family background, school quality, and psychological characteristics to estimate black and white test scores. Third, we present our estimates of the black-white wage gap using a racially unbiased AFQT composite score to control for racial differences in job skills. The score has a significant independent effect on wages, and a very small effect on the race coefficient.…Our empirical results, which demonstrate that the composite test scores of civilian African Americans in the NLSY, as a predictor of their wages, are racially biased. To do this, we show that F-Tests reject the hypothesis that AFQT composite scores equally predict African American and white wages. Further, when the components of the AFQT composite are used to predict wages, instead of the composite score, the coefficients on the verbal components are positive and significant for African Americans, while the coefficients on the math component is basically zero. The relationship for whites are exactly the opposite. This suggests that the NLSY test scores are measuring different job skills of African Americans and whites….The unconditional black-white gap in wages is about 30% for young men. Those who use the “raw” AFQT score purport to explain approximately two-thirds of the gap. Our “raw” AFQT score explains one-half of the female gap and one-fifth of the male gap. Yet when we use an estimator that “purges” the score of its racial bias, only 12 percent of the female gap is explained, and 5 percent of the male gap is explained….”

William Rodgers and William Spriggs, “What Does The AFQT Really Measure: Race, Wages, Schooling And The AFQT Score,” The Review Of Black Political Economic, June 1996, https://link.springer.com/article/10.1007/BF02690041