Contributions of Skills to the Racial Wage Gap

Abstract

Analyzing the distributions of wages, cognitive, and noncognitive skills for white, black, and Hispanic men reveals differences throughout these distributions. I use data from the National Longitudinal Survey of Youth 1979 and unconditional quantile Oaxaca-Blinder decompositions to decompose observed wage gaps throughout the distribution into portions explained by cognitive and noncognitive skills. Noncognitive skills explain 2–4 percent of the wage gap between blacks and whites and 9–25 percent of the wage gap throughout the distribution between Hispanics and whites, whereas cognitive skills explain 8–70 and 24–90 percent, respectively. Between blacks and Hispanics, noncognitive skills explain 5–10 percent and cognitive skills 9–24 percent.