Abstract
Viewing the United States as comprising many racial and ethnic groups, it is shown that group differences in earnings, schooling, and rates of return from schooling are striking and that the groups with higher levels of schooling also have higher rates of return. These data are shown to be consistent with a child quality investment model, but they are not consistent with the hypotheses that the primary determinants of schooling level are discrimination, minority group status, differences in time preference (discount rates), or “tastes” for schooling. Group differences in fertility and female labor supply are examined as partial determinants of investment in child quality. Policy implications are discussed.
This is a revision of the original article published in Quarterly Journal of Economics, 103(3), August 1988, pp. 571–597.
An early version of this paper was written for and presented at the National Academy of Education Conference on the State of Education. It has benefited from the comments of William Bridges, Carmel U. Chiswick, Gary S. Becker, Daniel Hamermesh, Christopher Jenks, Evelyn Lehrer, Jacob Mincer, Theodore W. Schultz, Teresa A. Sullivan, and Lawrence H. Summers, as well as those received at seminars and workshops at Australia National University, Northwestern University, Ohio State University, Queen’s University, University of Chicago, University of Illinois at Chicago, and Stanford University. It was also presented at the 1987 annual meetings of the Population Association of America. The research was financed in part by the Center for the Study of the Economy and the State, University of Chicago.
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Notes
- 1.
Much of the data for early analyses (1950s–1970s) was in terms of a white-nonwhite dichotomy, but blacks comprised about 90 percent of nonwhites in these data.
- 2.
The data are limited to the native-born because the analysis is concerned with the socioeconomic adjustment in the United States of racial and ethnic groups and seeks to avoid confounding these patterns with the selection criteria of recent U. S. immigration policy. In addition, analyses of earnings for women are far more complex than for men because of the effects on interrupted work histories of child care activities, marital stability, and spouse’s income.
For the purpose of this analysis the 1970 Census is superior to the 1980 Census. Because the 1980 Census did not ask parental nativity or mother tongue, Jews and foreign-parentage blacks cannot be separately identified. Moreover, there is some evidence of a recent rise in rates of return from schooling for blacks as a result of affirmative action programs temporarily increasing the labor market demand for high-skilled relative to low-skilled blacks (see Smith and Welch (1986, pp. 85–95)). In addition, the 72 percent increase in the number of persons classified as American Indians from the 1970 to the 1980 census suggests a lack of comparability across these censuses. This change in the self-reporting of race has a small impact on the number of whites but a large impact on the number and characteristics of American Indians.
- 3.
Jews are defined as second-generation Americans raised in a home in which Yiddish, Hebrew, or Ladino was spoken either in addition to or instead of English (see Chiswick (1983b) and Kobrin (1983)). Similar patterns emerge in other data in which Jews can be identified by a question on religion (Chiswick 1985).
- 4.
It is particularly noteworthy that American Jews have a substantially (and significantly) higher coefficient of schooling than white non-Jews. The Jewish coefficient is larger even when there is a statistical control for occupation, including separate variables for high paying professional occupations (Chiswick 1983b). Tomes (1982) found a similar pattern for Canadian Jews. The ranking persists even when schooling is treated as a nonlinear variable. See, for example, Chiswick (1985).
- 5.
- 6.
- 7.
It should be noted that many types of human capital have little transferability. For a more detailed discussion of the diaspora hypothesis with regard to American Jews, see Chiswick (1985).
- 8.
It is assumed that the rankings of average and marginal rates of return are the same across groups.
- 9.
This arises so long as the private direct (out-of-pocket) costs of schooling do not decline with discrimination.
- 10.
Skill need not be viewed as homogeneous. A useful distinction (see Schultz, 1975) is between “worker skills” (efficiency in performing a task) and “allocative skills” (efficiency in decision making). Groups may differ in the proportions of worker and allocative efficiency of their skills. If so, since allocative skills command a higher payoff during periods of greater disequilibrium in the economy (e.g., when there is a more rapid rate of economic change), group differences in rates of return from schooling could be a function of the state of the economy.
- 11.
- 12.
Group differences in the value of time of women may arise from differences in schooling or in location. Cardwell and Rosenzweig (1980), for example, show that the earnings of women relative to men varies systematically with the industrial structure of the metropolitan area. Relative earnings are lower in metropolitan areas that have more male-intensive industrial structures.
A higher cost of fertility control results in more children per family, which in turn implies a greater cost of raising average child quality. Hence, the cost of fertility control affects the relative price of quantity and quality of children.
- 13.
Among other effects, a larger number of siblings would result in greater time spent interacting with other children rather than with adults (parents). This apparently has adverse effects on average child quality. See Zajonc (1976) for an interesting theoretical time allocation model. See Blake (1987) for both a survey of the literature and a statistical analysis of the inverse relation between performance on standardized tests and the number of siblings. Blake finds the inverse relation is much stronger for verbal ability, which is more dependent on child-parent interaction, than on nonverbal ability. Blake also found that relatively few of the most able children were from large families, despite the obvious fact that large families produce a disproportionate share of children.
If the greater number of children in Group B were to arise from fewer couples remaining childless (i.e., there are more one-child families), it is possible for average child quality in Group B to exceed that in Group A. For an analysis of the relation between fertility rates and the average number of siblings per child, see Preston (1976).
- 14.
The complementarity of types of human capital does not detract from the observation that at the margin they are also substitutes. That is, at the margin more of one type of human capital (e.g., higher quality home-produced human capital) can offset deficiencies in other types of human capital (e.g., low quality of formal schooling).
- 15.
If the relative price difference in Generation I arose from the higher value of time of the mothers in Group A due to a higher schooling level, the quantity-quality fertility decisions will result in their daughters also having a higher value of time. Other determinants of relative prices, such as geographic location and psychic costs of fertility control, may change only slowly from generation to generation.
- 16.
There does not appear to be a literature on the distribution among children in the family of parental child care time or direct expenditures. Research on bequests, however, suggests that parents try to equalize their children’s wealth by making larger bequests to their children with less income. See Tomes (1982).
- 17.
An appendix to a published report from the 1930 Census provides comparative statistics on the value of owner-occupied homes and monthly rent for four “racial” minorities. The ranking of value of homes and rental payments were the same. In increasing order of value the groups were the Mexican-Americans, American Indians, Japanese, and Chinese, with a wide gap between the first two and the last two. (U. S. Bureau of the Census 1933, pp. 5–6 and Table 29, p. 201).
- 18.
This is consistent with the finding among whites of an inverse relation between parental ability and the number of children born. The negative effect is stronger (i.e., larger and more highly statistically significant) for the measures of mother’s ability than it is for father’s ability. For a recent study see Rutherford and Sewell (1988) and the references therein.
Solon (1989) shows that the small intergenerational correlation coefficients usually observed using micro data arise from measurement error and the homogeneity of the populations under study. By implication, larger correlation coefficients would be observed across heterogeneous groups.
- 19.
Using data from the National Longitudinal Survey Youth Sample, Michael and Tuma (1985) find that among white, black, and Hispanic young women, a later age of entry into motherhood is associated with having been raised in an intact family (i.e., with both parents) and with fewer siblings. The implication is that greater investment in a daughter results in later age for the start of her own childbearing.
- 20.
There is a debate in the literature as to whether race and ethnic differences in fertility can be explained solely by differences in characteristics or whether there is an independent effect of minority group status. The advocates of the latter approach have various hypotheses, some of which imply a positive minority status differential and some of which imply a negative differential. See Bean and Marcum (1978), and the exchange by Rindfuss (1980); Johnson (1980); Johnson and Nishida (1980); Marcum (1980); and Lopez and Sabagh (1980), and the references therein. For a recent discussion of these issues focusing on Mexican-Americans and blacks, see Bean and Swicegood (1985, Ch. 7).
- 21.
- 22.
In the late nineteenth and early twentieth centuries Japan and China had very different fertility rates. Nakamura and Miyamoto (1982) show that the Japanese attained a high degree of fertility control in the “premodern” period, while the Chinese maintained high fertility rates. They attribute the divergent pattern, in part, to differences in the family systems, a hierarchical feudal system based on nonpartible inheritance in Japan and a more egalitarian system based on partible inheritance in China. In the United States, however, the Chinese and Japanese are both low fertility populations.
- 23.
Becker (1981, p. 110), citing different studies, reports that “the Jewish birth rate was 47 percent below the average birth rate in Florence at the beginning of the nineteenth century; Jewish marital fertility was 20 percent below Catholic fertility in Munich in 1875.”
- 24.
The number of children ever born per 1000 women, 1957:
a standardized by age.
The data are from U.S. Bureau of the Census, n.d., Table 10, and U.S. Bureau of the Census, 1958b, Table 40, p. 41. Jewish women also have a later median age of first marriage; 21.3 years compared with 20.3 for all women (U. S. Bureau of the Census, n.d., Note to Table 5). In this 1957 survey religion was self-reported. See U.S. Bureau of the Census, 1958a.
- 25.
Imperfect substitutes for parental time can, to some extent, be purchased in the marketplace.
- 26.
For analyses of time inputs in child care by mothers and the effects of home investments on the children’s achievements, see Leibowitz (1974a, 1974b), Gronau (1976), Hill and Stafford (1974, 1980), Hunt and Kiker (1981), and Datcher-Loury (1988). These studies find that time devoted to child care, particularly educational care such as playing, reading, and talking, rises with the level of parental education. The increase is greater for mother’s schooling than for the father’s schooling. Studies have also found that greater parental time inputs (measured by mother’s labor supply, marital status as a proxy for one- or two-parent households, and number of siblings), raise the performance on standardized tests, school enrollment, school attainment, and earnings of the child. See, for example, Blake (1987), Datcher-Loury (1988), Fleisher (1977), Krein (1986), and Stafford (1985). Unfortunately, time budget surveys and longitudinal data files have sample sizes that are far too small for studies of racial and ethnic group differences in the determinants of child quality.
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This Appendix Reports the Partial Effects of the Presence of Children in the Home on Various Measures of Female Labor supply Focusing on Minority Groups
This Appendix Reports the Partial Effects of the Presence of Children in the Home on Various Measures of Female Labor supply Focusing on Minority Groups
-
A.
Black-White Comparison (Bell, 1974)
The partial regression coefficients (t-ratios in parentheses) are as shown in the following tabulation.
Dependent variables and groups | |||||
|---|---|---|---|---|---|
Full-time participation | Part- or full-time participation | ||||
Children | Black | White | Black | White | |
Children under age 4 | −13.7 | −17.5 | −14.7 | −23.1 | |
(dummy variable) | (−6.3) | (−12.4) | (−6.3) | (−14.2) | |
Number of children | −1.23 | −4.7 | −1.9 | −3.6 | |
Under age 18 | (−2.8) | (13.7) | (−4.1) | (−9.5) | |
The control variables include the woman’s age, schooling, number of times married, location, other family income, and husband’s weeks not worked.
-
B.
Mexican-Black-White Comparison (Reimers, 1985)
The dependent variable is labor force participation. The regression coefficients (standard errors in parentheses) are as shown in the following tabulation.
Children | White non-Hispanic | Mexican | Black non-Hispanic | |
|---|---|---|---|---|
Less than 6 years | −0.431 | −0.318 | −0.196 | |
(0.029) | (0.039) | (0.026) | ||
Age 6 to 11 | −0.235 | −0.064 | −0.043 | |
(0.023) | (0.030) | (0.018) | ||
Age 12 to 17 | −0.115 | −0.116 | −0.109 | |
(0.018) | (0.025) | (0.015) |
The control variables include the women’s age, education, nativity, marital status, and spouse’s age, education, and nativity, and other family income, among other variables. Most of the Mexican-origin women are native born.
-
C.
Jewish-Non-Jewish Comparison (Chiswick, 1986)
The partial effects (t-ratios in parentheses) are as shown in the following tabulation.
Dependent variables and groups | ||||||
|---|---|---|---|---|---|---|
Labor force participation | Percent of weeks worked | Hours worked per week | ||||
Children | Non-Jewish | Jewish | Non-Jewish | Jewish | Non-Jewish | Jewish |
Under age 6 | −0.138 | −0.264 | −0.117 | −0.197 | −4.598 | −6.913 |
(−34.8) | (−11.5) | (−33.7) | (−9.6) | (−31.4) | (−8.3) | |
Age 6 to 18 | −0.037 | −0.062 | −0.041 | −0.070 | −1.60 | −2.861 |
(−18.1) | (−5.9) | (−22.9) | (−7.5) | (−21.4) | (−7.5) | |
The control variables include age, education, marital status, location, and other family income.
-
D.
Japanese-Chinese-Filipino Comparison (Chamnivickorn, 1988)
With Japanese women serving as the benchmark, the partial differential effects (t-ratios in parentheses) are as shown in the following tabulation.
1970 Census | 1980 Census | |||||
|---|---|---|---|---|---|---|
Labor | Weeks | Labor | Weeks | |||
Race and | Force | Worked | Hours | Force | Worked | Hours |
Children | Part. | (percent) | Worked | Part. | (percent) | Worked |
Chinese: | ||||||
Under age 6 | 0.0804 | 0.0636 | 1.992 | −0.0017 | 0.0312 | −1.157 |
(1.88) | (1.60) | (1.11) | (−0.06) | (−1.15) | (−0.94) | |
Age 6–18 | 0.0026 | 0.0059 | −0.119 | −0.0110 | −0.0191 | 0.744 |
(0.12) | (0.28) | (−0.13) | (−0.50) | (−0.88) | (0.75) | |
Filipino: | ||||||
Under age 6 | 0.1050 | 0.0689 | 1.853 | 0.0553 | 0.0526 | 4.877 |
(2.36) | (1.66) | (0.99) | (1.91) | (1.83) | (3.72) | |
Age 6–18 | 0.0066 | 0.0216 | 0.244 | 0.0118 | 0.0151 | 0.415 |
(0.27) | (0.95) | (0.236) | (0.49) | (0.63) | (0.38) | |
Pooled regressions for U.S.-born Chinese, Japanese, and Filipino women, also controlling for age, education, marital status, location, other family income, and number and age of children. Samples sizes are 1493 (1/100 sample) for the 1970 Census and 9894 (1/20 sample) for the 1980 Census.
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Chiswick, B.R. (2020). Differences in Education and Earnings Across Racial and Ethnic Groups: Tastes, Discrimination and Investments in Child Quality. In: Chiswick, B. (eds) Jews at Work. Studies of Jews in Society, vol 2. Springer, Cham. https://doi.org/10.1007/978-3-030-41243-2_12
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