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Do Returns to Schooling Differ by Race and Ethnicity?

Do Returns to Schooling Differ by Race and Ethnicity? By LISA BARROW AND CECILIA ELENA ROUSE* well-being nor decrease inequality if their returns to schooling are low. We provide further evidence on the variation in returns to schooling by examining whether the benefits vary by race and ethnicity of the individual. We do so by estimating returns to schooling using the U.S. Decennial Census as well as the National Longitudinal Survey of Youth, 1979 (NLSY79). We find that the return to schooling is relatively constant across racial and ethnic groups, even controlling for ability and measurement error biases.1 I. Empirical Framework Inequality has increased in the United States over the past 25 years. In 1979, workers in the bottom 10th percentile of the wage distribution earned $6.88 per hour (in 2003 dollars) while those at the 90th percentile earned $30.19 per hour. By 1999 real wages at the 10th percentile had grown by roughly 5.4 percent to $7.25. At the same time real hourly wages at the 90th percentile grew 18.1 percent to $35.65. Because differences in human capital (education and experience) account for approximately one-third of the variation in wages and because the mean economic return to schooling is estimated at 10 percent, many researchers and http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review American Economic Association

Do Returns to Schooling Differ by Race and Ethnicity?

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References (20)

Publisher
American Economic Association
Copyright
Copyright © 2005 by the American Economic Association
Subject
Papers
ISSN
0002-8282
DOI
10.1257/000282805774670130
Publisher site
See Article on Publisher Site

Abstract

By LISA BARROW AND CECILIA ELENA ROUSE* well-being nor decrease inequality if their returns to schooling are low. We provide further evidence on the variation in returns to schooling by examining whether the benefits vary by race and ethnicity of the individual. We do so by estimating returns to schooling using the U.S. Decennial Census as well as the National Longitudinal Survey of Youth, 1979 (NLSY79). We find that the return to schooling is relatively constant across racial and ethnic groups, even controlling for ability and measurement error biases.1 I. Empirical Framework Inequality has increased in the United States over the past 25 years. In 1979, workers in the bottom 10th percentile of the wage distribution earned $6.88 per hour (in 2003 dollars) while those at the 90th percentile earned $30.19 per hour. By 1999 real wages at the 10th percentile had grown by roughly 5.4 percent to $7.25. At the same time real hourly wages at the 90th percentile grew 18.1 percent to $35.65. Because differences in human capital (education and experience) account for approximately one-third of the variation in wages and because the mean economic return to schooling is estimated at 10 percent, many researchers and

Journal

American Economic ReviewAmerican Economic Association

Published: May 1, 2005

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