Studying working and non-working men, we find that, after closing substantially from 1940 to
the mid-1970s, the median black-white earnings gap has since returned to its 1950 level, while
the positional rank the median black man would hold in the white distribution has remained little
changed since 1940. By contrast, higher quantile black men have experienced substantial gains in
both relative earnings levels and their positional rank in the white earnings distribution. Using a
new decomposition method that extends existing approaches to account for non-participation, we
show that the gains of black men at higher quantiles have been driven primarily by positional
gains within education level due to forces like improved access to quality schools and declining
occupational exclusion. At the median and below, strong racial convergence in educational
attainment has been counteracted by the rising returns to education in the labor market, which
have disproportionately disadvantaged the shrinking but still substantial share of blacks with
lower education.
This analysis reveals several key findings. First, the increase in returns to education over the latter half of the study period has been principally responsible for the lack of positional gains for low-skilled black men since 1970. In fact, racial convergence in educational attainment would have led to strong positional gains for black men at the median and below, except that these men faced strong
structural headwinds from the simultaneously increasing rising returns to education, both in terms of wages and in the probability of employment. In essence, the relative gains that low-skilled black men have made through the acquisition of more education have been directly countered by the increase in the
labor market returns associated with the racial differences in education that
remain.12 Taken as a whole, our results imply that the progressively worse
economic outcomes of black men in the lower and middle parts of the earnings
distribution in recent decades have been primarily the result of structural
changes to the economy that have devastated the working lives of low-skilled men
more generally, especially the strengthened relationship between education and
economic rank.
Second, in sharp contrast to the median, the positional gains of high-skilled
black men have been largely due to improvements in relative position within
education categories, especially among those with some college and a college
degree. The vast majority of the relative gains of black college-educated men
occurred in the 1960s and 1970s and these gains have held through the end of the
study period as an increasing share of men have attended college. These results
suggest that much of the decline in racial earnings differences among high-skilled
men has been the result of more equal access to quality higher education and
high-skilled occupations and professions.
https://www.nber.org/system/files/wo...22797.rev0.pdf