The measured black-white wage gap among women is too small

Existing work suggests that black-white gaps in potential wages are much larger among men than women and further that black-white differences in patterns of female labor supply are unimportant. However, panel data on wages and income sources demonstrate that the modal young black woman who does not engage in market work is a single mother receiving government aid whereas her white counterpart is a married mother receiving support from a working spouse. The median black-white gap in log potential wages among young adult women in 1990 was likely at least 60 percent larger than the gap implied by reported earnings and hours worked in the Current Populations Surveys.