School Quality and Black-White Relative Earnings: A Direct Assessment

Abstract

Between 1960 and 1980 the gap in earnings between black and white males narrowed by 15 percent. A detailed analysis of 1960, 1970, and 1980 Census data indicates that increases in the relative return to education were largely responsible for black workers' relative earnings gains. One explanation for these higher returns is that they reflect the market valuation of higher-quality schooling available to later cohorts of black students. To investigate the role of school quality in the convergence of black and white earnings, we have assembled data on three aspects of school quality -- pupil/teacher ratios, annual teacher pay, and term length -- for black and white schools in l8 segregated states from 1915 to 1966. The school quality data are then linked to estimated rates of return to education for men from different cohorts and states. Improvements in the relative quality of black schools explain roughly 20 percent of the narrowing of the black-white earnings gap in this period.