Early Career Wage Growth of White and Black Women

Sigal Alon, Tel Aviv University
Yitchak Haberfeld, Tel Aviv University

A substantial wage differential exists between black and white female workers of similar educational levels. This "unexplained" white-black wage gap may result from both unmeasured earnings-enhancing attributes favoring whites, as well as market discrimination against blacks. To separate these two effects from one another, we estimate a within-cohort fixed-effect model that assesses the race-based gap in wage growth within four educational levels. Using data from the NLSY Work History file we depict the diverging wage trajectories of women's first post-schooling decade. The results point at a disturbing pattern: while wage growth of black women who attend college is similar to that of whites, the less-educated black women, do not experience similar rates of wage growth as their white counterparts. These estimates capture, at least in part, the degree to which labor market treatment (i.e., discrimination) contributes to the growing wage disparities between less educated black and white young women. Several possible explanations for our results are discussed.