Grodsky, Eric, and Devah Pager
Working paper no. 1999-28
In this paper we explore individual and occupational characteristics that explain earnings inequality between black and white men. Our research is motivated by the idea that the racial earnings gap is generated not only by individual differences but also by systematic variation in the occupational structure that serves to attenuate or exacerbate the effects of race. Using data from the 1990 5% PUMS and the Dictionary of Occupational Titles, we employ a hierarchical linear modeling approach that allows us to simultaneously explore the mechanisms of income inequality which operate within and between occupations. Among private sector employees, we find striking evidence that racial disparities grow larger as one moves up the occupational earnings hierarchy. This association between average occupational earnings and within-occupation racial disadvantage reveals a much overlooked source of racial earnings inequality which constrains the opportunities available to black men in the private sector. This association cannot be explained by measured individual characteristics, nor by the status, compositional, or skill characteristics of occupations. In the public sector, on the other hand, racial earnings inequality is not systematically associated with average occupational earnings, and is instead more closely tied to individual and occupational skills. We consider the implications of our results and suggest directions for future research.