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Title: The Black-White Lifetime Earnings Gap

Citation Type: Working Paper

Publication Year: 2020

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Abstract: In the 1940 census, white males earned twice as much as black males. But white males born in 1900 had lifetime earnings 3.4 times as large as black males born in 1900. The black-white lifetime earnings gap is so much larger than the cross-sectional earnings gap because of the large black-white gap in life expectancy. 48% of black males born in 1900 died before the age of 30 as compared to just 26% of white males. Economists often use cross-sectional earnings gaps to measure inequality between groups, but a more complete measure of inequality combines income profiles and mortality risk. I develop a model of optimal consumption in a world with mortality and I calibrate the model separately for each cohort of black and white males born between 1900 and 1970. Using this model, I find that the black-white welfare gap shrank by 48% from the 1900 to the 1920 birth cohorts as black and white mortality rates converged, but the black-white welfare gap declined only modestly from the 1920 to 1970 birth cohorts.

Url: https://ezrakarger.com/karger_mortality_draft_30aug2020.pdf

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Authors: Karger, Ezra

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Data Collections: IPUMS USA

Topics: Poverty and Welfare, Race and Ethnicity

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