Regional Differences in the Structure of Earnings. Program on Regional and Urban Economics, Discussion Paper No. 66.

Slightly over 180,000 draftees were surveyed 10 months after leaving the military to gain data regarding training, employment, occupation and wages if working, marital status, education, Armed Forces Qualification Test (AFQT) score, age, race, military occupation, and home. Differences in earnings functions among smaller, homogeneous labor markets are examined in terms of urban and regional location and black and white individuals. Aggregate statistics about the structure of earnings, characteristics of earnings functions, regional variations in earnings, and black-white differentials are analyzed; 10 tables supplement the discussion. Conclusions state the estimated effect of schooling and ability differences is low, with an additional year of schooling worth about 5 percent higher income and one decile move in the AFQT score matched by 1 percent increase in earnings for whites, lower for blacks. The estimation of separate earnings functions for labor markets across the country is significant, with the choice of region for employment often equivalent to the marginal earnings of several years of schooling. Racial difference in earnings stems from differences in the earning functions for blacks and whites, not in schooling, ability, or experience levels. Sample and population characteristics are discussed in the appendix. The nonrepresentative character of the sample is emphasized. (LH)