The effect of socioeconomic background on earnings: A comparison by race

Consistent with previous studies, we find that family background variables exert significant indirect effects on earnings of both white and black males. In the case of blacks, parental income in particular exerts a significant direct effect on earnings. Education is found to be a much more important determinant of black earnings than white earnings, while job tenure has the reverse relationship. After adjustments, parental income and level of education exert the strongest effects on reducing the black-white earnings differential.