Wednesday, November 17, 2021
CGIS Knafel Building (K354) - 12:10-1:30 pm
Higher education can be a double-edged sword in shaping the black-white earnings gap. It may serve as an equalizer, if black youth benefit more from attending and completing college than white youth. It may also reinforce racial inequality, given that black college-goers are less likely to complete college relative to white students. We employ a novel causal decomposition and a debiased machine learning method to isolate the equalizing and disequalizing effects of college and unveil the sources of these effects. Analyzing data from the NLSY97, we find that among men, a BA degree has a strong equalizing effect on earnings, but this equalizing effect is blunted by a disequalizing effect associated with unequal likelihoods of BA completion. Moreover, a BA degree narrows the male black-white earnings gap not by reducing the influence of class background and pre-college academic ability, but by lessening the “unexplained” penalty of being black in the labor market. To illuminate the policy implications of our findings, we estimate counterfactual earnings gaps under a series of idealized educational interventions. We find that interventions that both boost college attendance and BA completion rates and close racial disparities in these transitions can substantially reduce the black-white earnings gap.