This study analyses trends in US male black-white earnings gaps by sub-metropolitan residence. Large suburban earnings gaps existed in 1979; however, central city gaps exhibited the largest increases during the 1980s. The increases are decomposed into changes in measurable characteristics, changes in the prices of measurable characteristics, changes in discrimination and/or unobservable skills, and changes in white earnings inequality. Changes in measured characteristics and their prices, and changes in inequality account for little of the increases in central city gaps. Either labour market discrimination worsened or racial differences in unobservable skills widened. A review of the literature suggests that this paper's evidence is more consistent with a worsening in discrimination.
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