Racial Earnings Disparities and Family Structure

One explanation for the widening of racial earnings gaps among family heads during the 1980s is that black families were increasingly headed by females during that period. This explanation is tested using data on black and white family heads in 1976 and 1985 from the Institute for Research on Poverty's Current Population Survey. Log‐earnings equations, corrected for selection bias and for the endogeneity of labor force participation, are estimated for blacks and whites in 1976 and 1985. If the impact of rising female‐family headship on labor force participation is ignored, one finds support for the family structure explanation. But support for alternative explanations is also found. There are substantial impacts of within‐race gender discrimination and of market racial discrimination. When the endogeneity of family structure is taken into account, further support is found for the view that endowment differences only explain a modest portion of the rising gap in earnings between black and white family heads.