The Quality of Education and Cohort Variation in Black-White Earnings Differentials: Reply
models where only years of education, but no quality measures, were included, returns to education declined for both blacks and whites in older cohorts. The interesting result from Welch's point of view was that the percentage returns to black education fell off appreciably faster compared to whites as the cohort aged. The implication is that blacks have been gaining with respect to whites as far as returns to education are concerned. Welch observed that this gain to blacks is likely to be due to a recent rise in the quality of education for blacks relative to whites. From a policy point of view, this leads to the conclusion that, however limited its role may be, education still is a potential policy tool with which to reduce observed racial earnings differences. The basic problem with Welch's results is that the observed decline in the returns to education for older blacks could have oc
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