What Does the Afqt Really Measure: Race, Wages, Schooling and the Afqt Score

Recent literature on the black-white wage gap continues to show that a large residual due to race remains, and during the 1980s it grew in size. One interpretation is that the residual gap measures the existence of labor market discrimination. Another interpretation is that imbedded in the residual...

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Bibliographic Details
Published in:The Review of Black political economy 1996-04, Vol.24 (4), p.13-46
Main Authors: Rodgers, William M., Spriggs, William E.
Format: Article
Language:English
Subjects:
African Americans
Analysis
Armed forces
Bias
Demographic aspects
Econometrics
Education
Estimates
Examinations
Income distribution
Income forecasting
Indexing in process
Interpretation
Labor economics
Labor market
Longitudinal studies
Race
Racial differences
Schooling
Test bias
Testing
Tests
Variables
Wage differential
Wages
Wages & salaries
White people
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Summary:Recent literature on the black-white wage gap continues to show that a large residual due to race remains, and during the 1980s it grew in size. One interpretation is that the residual gap measures the existence of labor market discrimination. Another interpretation is that imbedded in the residual gap are racial differences in unobservable skills that grew during the 1980s, or that racial differences in these skills remained constant, but their returns grew. To account for these unobservable skills, researchers use the National Longitudinal Survey of Youth (NLSY). The NLSY contains the Armed Forces Qualification Test (AFQT), a direct measure of skills obtained via family and school environments. When researchers include the AFQT composite score, the black-white wage gap narrows. Doing this, they assume that the AFQT score is a racially unbiased predictor of wages. We present evidence that generates doubts that the AFQT score is racially unbiased. We first show that F-Tests reject the hypothesis that AFQT scores equally predict African American and white wages. Second, we show that a significant difference exists in the ability of variables representing family background, school quality, and psychological characteristics to estimate black and white test scores. Third, we present our estimates of the black-white wage gap using a racially unbiased AFQT composite score to control for racial differences in job skills. The score has a significant independent effect on wages, and a very small effect on the race coefficient.
ISSN:0034-6446
1936-4814
DOI:10.1007/BF02690041