Table 1 Sample Means 1982– 98 Panel
Black Mexican
White Log hourly wage
2.208 2.332
2.483 0.633
0.594 0.584
Age 28.859
28.946 28.706
3.931 3.970
3.964 Potential experience
10.548 10.935
9.792 4.205
4.222 4.309
Unrestricted actual experience 8.599
9.608 9.769
4.080 4.150
4.202 Restricted actual experience
7.586 8.413
8.138 4.005
4.135 4.226
Unrestricted out of the labor force 4.580
3.646 3.253
2.601 2.308
2.220 Restricted out of the labor force
2.794 2.226
1.608 2.510
2.148 1.904
Years of education 12.311
12.011 12.914
2.027 2.022
2.442 Married
0.338 0.535
0.561 0.473
0.499 0.496
Number of children 1.207
1.332 0.881
1.272 1.358
1.066 Person-year observations
8,070 2,363
14,106 Person observations
1,037 275
1,909
Note: Averaged over i and t. All experience and nonworking time variables are reported in years. Standard deviations in parentheses.
unrestricted actual experience. Not surprisingly, measured actual experience accumula- tions are lower using restricted actual experience. Average actual experience falls by
about one year for black and Mexican men and 1.6 years for white men. The bigger average drop across experience measures for white men occurs because more white men
go to college. Estimates of time spent out of the labor force similarly differ across unrestricted and restricted denitions. While average time spent out of the labor force
is highest for blacks and lowest for whites under both denitions, the drop between unrestricted and restricted denitions is slightly higher for blacks.
III. Differences in Labor Force Attachment across Race Groups
There is substantial evidence that unemployment and out-of-the- labor-force spells constitute a signicant fraction of time for many minority men.
For example, D’Amico and Maxwell 1994 nd that black youth work substantially less than white youth during the transition period from school to the labor market.
Moore 1992 nds that black workers who are displaced from a job take signicantly longer to nd new employment than do white workers. For example, 45.7 percent
of displaced black male workers took more that a year to nd a new job compared to only 24.7 percent of white men in 1986. DeFreitas 1986 similarly nds that
minority unemployment rates are higher than white unemployment rates and that the disparity is magnied during recessions. In particular, the Hispanic male unem-
ployment rate exceeds that of white men in booms recessions by 2.8 4.5 percent- age points while the black unemployment rate is 8.4 10.9 percentage points higher
in booms recessions compared to white men. In addition, Baldwin and Johnson 1996 nd that wage discrimination against black men reduced black male employ-
ment by approximately 7 percentage points in 1984. Western and Pettit 2000 further point out that the black unemployment rate is understated because incarcerated indi-
viduals are excluded. They nd that correcting for incarceration rates reduces the employment-population ratio for men aged 20–35 from 83.4 to 81.6 percent for
white men and from 66.6 to 58.5 percent for black men in 1996.
The racial differences in labor force attachment are most easily seen graphically. Figure 1 plots the mean time spent out of the labor force for black, Mexican, and
white men by age. Panel A depicts unrestricted time spent out of the labor force and Panel B depicts restricted time spent out of the labor force. Under both specications,
black men have accumulated more time out of the labor force at every age, with the divergence between white and black men growing with age. As we have seen with
many variables, Mexican men fall between black and white men. For example, by age 30, the average black man has accumulated 4.9 3.0 years of unrestricted re-
stricted time out of the labor force compared to 3.9 2.4 years for Mexican men and 3.4 1.6 years for white men. The importance of properly accounting for differences
in labor force attachment when estimating the role of labor market behavior in account- ing for racial wage gaps is the focus of the remainder of the paper.
IV. Two-Stage Fixed Effects Analysis of the Racial Wage Gap