The role of test scores in explaining race and gender differences in wages

Previous research has suggested that skills reflected in test-score performance on tests such as the Armed Forces Qualification Test (AFQT) can account for some of the racial differences in average wages. I use a more complete set of test scores available with the National Longitudinal Survey of Youth 1979 Cohort to reconsider this evidence, and the results suggest a conclusion similar to earlier research. I also examine the ability of test scores to account for gender differences in wages. Women do not perform as well as men on two math-oriented tests, but they perform better on two speed-oriented tests that appear to have a strong relationship with wages. On net, the test-score difference can help account for only a small part of the gender difference in wages (for any race). Further results suggest that unexplained race and gender differences in wages have been growing over time for the 1979 cohort.