Differences in Education and Earnings Across Racial and Ethnic Groups: Tastes, Discrimination and Investments in Child Quality

Viewing the United States as comprising many racial and ethnic groups, it is shown that group differences in earnings, schooling, and rates of return from schooling are striking and that the groups with higher levels of schooling also have higher rates of return. These data are shown to be consistent with a child quality investment model, but they are not consistent with the hypotheses that the primary determinants of schooling level are discrimination, minority group status, differences in time preference (discount rates), or “tastes” for schooling. Group differences in fertility and female labor supply are examined as partial determinants of investment in child quality. Policy implications are discussed.