Question

In the Neal and Johnson (1996) article, the authors find that controlling for AFQT scores reduces the coefficient on "black” for men. This means that: A. Accounting for pre-labor market characteristics is important in understanding the wage gaps observed in the labor market B. AFQT is a predictor of wages C. Blacks and whites have different scores on the AFQT D. All of the above E. None of the above LOG WAGE REGRESSIONS BY SEX ( Black Hispanic - MEN (N - 1,593) (1) (2) (3) -.244 -.196 -.072 (.026) .025) (.027) -.113 -.045 .005 (.030) (029) (.030) .048 .040 (.014) (.013) (.013) .172 (012) -.013 (011) ,061 Age .046 AFQT AFQT High grade by 1991 (.005) R? .059 .155 .168

Answer 1

A) accounting for pre labor market characteristics is important in understanding the wage gaps observed in labor market

AFQT is a racially unbiased measure of basic skills that helps predict actual job performance. Under the sample of the test taken most of this group had neither entered the labor market full-time nor started postsecondary schooling when they were tested. As a consequence, discrimination either in the labor market or in postsecondary education could not directly affect the test performance of blacks in this young cohort.