Volume 21, Number 1 (Winter) 1986
Schwartz, Saul. 1986. "Earnings Capacity and the Trend in Inequality Among Black Men." Journal of Human Resources 21(1):44-63.
The major purpose of this article is to estimate the potential earnings of black men supposing that they were to work full time, full year-that is, at their earnings capacity-at two widely separated points in time. The effect of changes in earnings capacity on changes in the distribution of annual earnings is then computed. In both 1967 and 1979, roughly three-quarters of the inequality in observed earnings is due to differences in earnings capacity. But about two-thirds of the change in inequality for black men is due to changes in employment status, while the remaining one-third is due to changes in earnings capacity.
The author is an assistant professor of economics at Tufts University. He
would like to thank his colleague Andrew Reschovsky for a sensitive reading of
an earlier version of this article, and David Betson for pointing out several
important problems in the earlier paper. Eugene Smolensky, Sheldon Danziger, Lee
Hansen, and an anonymous referee also added valuable suggestions and support.
The research for the article was supported in part by a
contract to the Institute for Research on Poverty of the University of Wisconsin
from the U.S. Department of Health and Human Services. The views expressed in
the article are those of the author and do not necessarily reflect the views of
either DHHS or the Institute for Research on Poverty.
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X