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The Closing of the Gender Gap as a Roy Model Illusion

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  • Casey B. Mulligan
  • Yona Rubinstein

Abstract

Rising wage inequality within-gender since 1975 has created the illusion of rising wage equality between genders. In the 1970's, women were relatively equal (to each other) in terms of their earnings potential, so that nonwage factors may have dominated female labor supply decisions and nonworking women actually had more earnings potential than working women. By 1990, wages had become unequal enough that they dominated nonwage factors, so that nonworking women tended to be the ones with less earnings potential, and the wage gap between workers and nonworkers was large. Accounting for the growing selection bias using both parametric and semi-parametric versions of the Roy model, we show how the earning power of the median woman has not caught up to the earning power of a median man, even while the earning power of the median working woman has. As an illustration, we give some attention to wives with advanced degrees -- they have high and stable labor force participation rates -- and show how their measured wages have grown at about the same rate as those of men with advanced degrees.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10892.

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Date of creation: Nov 2004
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Handle: RePEc:nbr:nberwo:10892

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  1. Derek Neal, 2004. "The Measured Black-White Wage Gap among Women Is Too Small," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages S1-S28, February.
  2. Juhn, Chinhui & Kim, Dae Il, 1999. "The Effects of Rising Female Labor Supply on Male Wages," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 23-48, January.
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Cited by:
  1. Olivetti, Claudia & Petrongolo, Barbara, 2006. "Unequal Pay or Unequal Employment? A Cross-Country Analysis of Gender Gaps," IZA Discussion Papers 1941, Institute for the Study of Labor (IZA).
  2. Lex Borghans & Bas ter Weel & Bruce A. Weinberg, 2006. "People People: Social Capital and the Labor-Market Outcomes of Underrepresented Groups," NBER Working Papers 11985, National Bureau of Economic Research, Inc.
  3. Martina Mysíková, 2012. "Gender Wage Gap in the Czech Republic and Central European Countries," Prague Economic Papers, University of Economics, Prague, vol. 2012(3), pages 328-346.
  4. Beck, T.H.L. & Levine, R. & Levkov, A., 2007. "Big bad banks? The impact of U.S. branch deregulation on income distribution," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3508402, Tilburg University.
  5. Bas ter Weel & Lex Borghans & Bruce A. Weinberg, 2013. "People Skills and the Labor-Market Outcomes of Underrepresented Groups," CPB Discussion Paper 253, CPB Netherlands Bureau for Economic Policy Analysis.
  6. Casey B. Mulligan & Yona Rubinstein, 2005. "Selection, Investment, and Women's Relative Wages Since 1975," NBER Working Papers 11159, National Bureau of Economic Research, Inc.
  7. Izquierdo, Mario & Lacuesta, Aitor, 2007. "Wage inequality in Spain: recent developments," Working Paper Series 0781, European Central Bank.
  8. Chinhui Juhn & Simon Potter, 2006. "Changes in Labor Force Participation in the United States," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 27-46, Summer.
  9. Catia Batista, 2008. "Why Doesn't Labor Flow from Poor to Rich Countries? Micro Evidence from the European Integration Experience," Economics Series Working Papers 402, University of Oxford, Department of Economics.
  10. Aitor Lacuesta & Mario Izquierdo, 2012. "The contribution of changes in employment composition and relative returns to the evolution of wage inequality: the case of Spain," Journal of Population Economics, Springer, vol. 25(2), pages 511-543, January.
  11. Marigee Bacolod & Bernardo S. Blum, 2005. "Two Sides of the Same Coin: U.S. “Residual†Inequality and the Gender Gap," Working Papers 050617, University of California-Irvine, Department of Economics.

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