Description:

Sonia Bhalotra (University of Warwick)

Title: Investments Over the Life Course and the Black-White Earnings Gap 

Abstract:    The stability of the race pay gap highlights the importance of systemic disadvantages faced by blacks, which weaken the force of one-off investments in single domains. We examine investments across two domains and two stages of the lifecourse: a positive early life health shock owing to the arrival of the first antibiotics in 1937, and a positive labor market shock owing to minimum wage legislation in 1967. We find evidence of complementarities between the two in producing adult earnings, with larger interaction effects for black than for white men. Our estimates suggest that the complementarity reduced the racial earnings gap by 13.4%. In addition, exposure to minimum wage increases in adulthood reversed the widening of the racial earnings gap among cohorts benefiting from the early health shock.