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Simulation Estimation of the Convergence of the Black–White Earnings Gap and Income Dynamics *
Author(s) -
Chang ShengKai
Publication year - 2012
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/j.1468-0084.2011.00647.x
Subject(s) - earnings , spurious relationship , convergence (economics) , tobit model , panel study of income dynamics , economics , demographic economics , population , econometrics , estimator , estimation , social security , wage , white (mutation) , labour economics , statistics , mathematics , demography , macroeconomics , sociology , market economy , biochemistry , chemistry , accounting , management , gene
In this article, the effect of Title VII of the 1964 Civil Rights Act on the convergence of the black–white earnings gap and income dynamics is studied through the dynamic panel Tobit models implemented using the simulation estimators. It is found that the black–white earnings gap declined moderately after the implementation of Title VII of the 1964 Civil Rights Act in 1965. Based on the simulation studies of wage trajectories, it is also found that the positive impact of the Civil Rights Act on the convergence of the black–white earnings gap is especially significant for the group of middle‐aged and highly educated workers. Moreover, the rich dynamic structure of the earnings process is identified from the Current Population Survey‐Social Security Administration data set. It is shown that the various sources of dynamics in the earnings process are dominated by spurious state dependence for both blacks and whites.