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Long-Term Earnings Differentials Between African American and White Men by Educational Level

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Abstract

This paper investigates long-term earnings differentials between African American and white men using data that match respondents in the Survey of Income and Program Participation to 30 years of their longitudinal earnings as recorded by the Social Security Administration. Given changing labor market conditions over three decades, we focus on how racial differentials vary by educational level because the latter has important and persistent effects on labor market outcomes over the course of an entire work career. The results show that the long-term earnings of African American men are more disadvantaged at lower levels of educational attainment. Controlling for demographic characteristics, work disability, and various indicators of educational achievement does not explain the lower long-term earnings of less-educated black men in comparison to less-educated white men. The interaction arises because black men without a high school degree have a larger number of years of zero earnings during their work careers. Other results show that this racial interaction by educational level is not apparent in cross-sectional data which do not provide information on the accumulation of zero earnings over the course of 30 years. We interpret these findings as indicating that compared to either less-educated white men or highly educated black men, the long-term earnings of less-educated African American men are likely to be more negatively affected by the consequences of residential and economic segregation, unemployment, being out of the labor force, activities in the informal economy, incarceration, and poorer health.

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Notes

  1. Tamborini et al. (2015) show that synthetic cohort estimates are subject to the over-estimation bias of long-term earnings.

  2. Our data do not provide information on whether respondents were ever incarcerated. Men who were incarcerated or otherwise institutionalized during both 2004 and 2008 are not included in our sampling frame.

  3. Following both legal and ethical dictates, our analysis of these data maintains the complete anonymity of all of the respondents during all phases of this research.

  4. Nonetheless, our final estimates are not sensitive to weighting. For example, the statistical significance of our estimated coefficients do not change (at the 0.05 level) when using weights relative to not using them.

  5. The self-employed are included in our analysis as they are part of the formal labor market. Because unincorporated self-employed persons do not file a W-2 form, their earnings are obtained from other tax documents that are accessed by the SSA.

  6. As a sensitivity analysis, we re-estimated our models after deleting those who completed their highest degree at age 29 or older. The results are quite similar. Nonetheless, we recognize that our analysis is inherently descriptive and we cannot assume that the effect of education is purely causal.

  7. These results are available upon request.

  8. Table 4 are the results restricting the target sample as described in each model. To address the concern that the SIPP surveys are not designed to draw a random sample within the subpopulation we analyzed in Table 4 so that standard errors and significance levels can be different from the random sample of subpopulation, we did additional analyses with the “subpop” option of Stata’s svy commands. New results are almost identical with Table 4 (not shown here). No statistical significance levels for the estimated interaction effects in Table 4 are changed in the new estimates.

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Acknowledgements

We thank the Editor and three anonymous reviewers for their helpful and constructive comments. This research was partially supported by the Eunice Kennedy Shriver National Institute of Child Health and Human Development of the National Institute of Health (Grant No.: 1R03HD073464-01A1) and Spencer Foundation (Grant No.: 201400077). ChangHwan Kim also received support from the University of Kansas (General Research Fund #2301065). The views expressed in this study are those of the authors and do not represent the views of the U.S. Social Security Administration or any organization or entity of the federal government. The administrative data are accessible only at a secured site and for approved projects. SSA’s Disclosure Review Board has reviewed the statistics reported herein. For researchers with access to these data, our computer programs are available upon request.

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Authors and Affiliations

  1. Department of Sociology, Texas A&M University, 311 Academic Bldg., 4351 TAMU, College Station, TX, 77843, USA

    Arthur Sakamoto

  2. Office of Policy Research & Retirement Policy, U.S. Social Security Administration, 500 E. St, SW, 9th floor, Washington, DC, 20254, USA

    Christopher R. Tamborini

  3. Department of Sociology, University of Kansas, 1415 Jayhawk Blvd., Room 716, Lawrence, KS, 66045, USA

    ChangHwan Kim

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  1. Arthur Sakamoto
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Correspondence to ChangHwan Kim.

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Sakamoto, A., Tamborini, C.R. & Kim, C. Long-Term Earnings Differentials Between African American and White Men by Educational Level. Popul Res Policy Rev 37, 91–116 (2018). https://doi.org/10.1007/s11113-017-9453-1

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