Despite several decades of research there is still widespread disagreement over the interpretation of the wage differences between black and white workers. Do the differences reflect productivity differences, discrimination, or both? If lower black earnings reflect a productivity difference, then an economy-wide increase in the relative wages of more highly-skilled workers should lead to a parallel increase in the black-white earnings gap. We evaluate this hypothesis using longitudinal data for men and women from the Panel Study of Income Dynamics. Our findings suggest that returns to observed and unobserved skills of male workers rose by 5-10 percent between 1979 and 1985. For female workers, the return to observed skills was relatively constant while the return to unobserved skills increased by 15 percent. The evidence that black-white wage differentials rise with the return to skill is mixed. Among female workers the black-white wage gap widened in the early 1980s -- consistent with the premise that racial wage differences reflect a productivity difference. For men in our sample the black-white wage gap declined between 1979 and 1985 -- a change that is inconsistent with the rise in the return for skills

Comprises essays which describe and analyse the major changes in wage relationships between 1963 and the 1980s. Notes the increase in wage differentials for workers with different levels of schooling as the most pervasive change.

The "Great Compression" of the 1940s produced a substantial narrowing in wage differentials in the United States. This paper examines the role of the Great Compression in fostering black-white wage convergence in the 1940s. Using data from the 1940 and 1950 census public use samples, I show that between half and two-thirds of black white wage convergence at the sample means can be attributed to shifts in wage structure associated with the Great Compression. I also demonstrate that, by (temporarily) boosting the incomes of black parents. the Great Compression led to greater increases in schooling levels among black teens between 1940 and 1950 than would have occurred otherwise.