Soft Skills, Hard Skills, and the Black/White Wage Gap

22 Pages Posted: 14 May 2020

See all articles by C. Simon Fan

C. Simon Fan

Lingnam University - Department of Economics

Xiangdong Wei

Lingnan College

Junsen Zhang

The Chinese University of Hong Kong (CUHK) - Department of Economics

Date Written: April 2017

Abstract

This study examines the relative importance of soft skills versus hard skills across occupations and its impact on the observed wage gap between Blacks and Whites in the United States. It posits that the Black/White pay gap may vary across occupations that require the use of different types of skills. We classify occupations into hard‐skill intensive versus soft‐skill intensive jobs using the skill content measures of different occupations from the Occupational Information Network (O*Net). We then use data from the National Longitudinal Survey of Youth (NLSY) and Current Population Survey (CPS) to investigate the impact of job skill type on the wage gap. Consistent with our theoretical predictions, we show that this wage gap in white‐collar jobs is smaller for hard‐skills jobs than it is for soft‐skills jobs. Moreover, we demonstrate that, in response to variations in the wage gap across different occupations, Blacks are more likely to self‐select themselves into hard‐skills jobs, ceteris paribus. This shows not only that discrimination against Blacks varies across occupations, but also that such discrimination induces the self‐selection of Blacks into certain occupations. Moreover, this finding highlights the role played by co‐worker/customer discrimination in explaining the racial wage gap in the U.S. labor market.

JEL Classification: J15, J31

Suggested Citation

Fan, Chengze Simon and Wei, Xiangdong and Zhang, Junsen, Soft Skills, Hard Skills, and the Black/White Wage Gap (April 2017). Economic Inquiry, Vol. 55, Issue 2, pp. 1032-1053, 2017, Available at SSRN: https://ssrn.com/abstract=3596360 or http://dx.doi.org/10.1111/ecin.12406

Chengze Simon Fan (Contact Author)

Lingnam University - Department of Economics ( email )

Tuen Mun
Hong Kong
(852) 2616-7206 (Phone)
(852) 2891-7940 (Fax)

Xiangdong Wei

Lingnan College ( email )

8 Castle Peak Road
Hong Kong
China

Junsen Zhang

The Chinese University of Hong Kong (CUHK) - Department of Economics ( email )

Shatin, N.T.
Hong Kong

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