Using National Longitudinal Survey of Youth data, this study finds that education rates of return vary across racial/ethnic groups because of differing human capital investments made by families in each group. School quality also matters. Nearly the entire white/black earnings gap would disappear if black children had school and home…

Hypothesizes that the labor market recognizes differences in the educational quality and quantity of urban and suburban education and rewards young workers accordingly. Estimating earnings equations for African-American and white youths shows that attendance at a central city high school does, indeed, lower earnings between 4 and 10 percent. (12…