Black/White Wage Convergence: The Role of Public Sector Wages and Employment

Abstract

This paper assesses the relative contribution of the public and private sectors, through their employment and wages, to the black/white wage convergence that occurred in the U.S. economy over the 1963–92 period. Applying standard decomposition methods to Current Population Survey data, the authors show that almost all the convergence in black/white relative wages in the 1963–75 period was due to black/white convergence in the private sector. Similarly, the post-1975 slowdown in black/white wage convergence was almost completely due to a corresponding slowdown in the private sector. The unimportance of the public sector, the authors argue, arises for two reasons: the public sector never accounted for more than 20% of civilian employment over the 1963–92 period; and blacks' historic success in that sector left relatively little room for further wage gains there, whereas in the private sector blacks had considerable ground to make up.