Labor market dynamics and black–white earnings gaps

Earnings gaps between black and white workers have widened over the past 30–40 years. This increase is not explained by differences in observed demographics or the industry and occupational composition of employment. We suggest that variation in labor market dynamics between black and white workers are important. Disparities in job switching, job loss, and associated wage growth result in flatter career wage profiles for black workers and widening earnings gaps over the work life. •Earnings gaps between black and white men double over first fifteen years of career.•Gap grows substantially during early career even after adjusting for observables.•Early career earnings gaps between black and white men grow at all education levels.•Labor market dynamics, namely higher job churn for black men, drive growing gaps.•Results for women similar but differences are about half the size as those for men.