Black white wage convergence: The role of public sector wages and employment

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 ail 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.