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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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Cited by:
  1. Claudia Olivetti & Barbara Petrongolo, 2005. "Unequal Pay or Unequal Employment? A Cross-Country Analysis of Gender Gaps," Boston University - Department of Economics - Macroeconomics Working Papers Series WP2005-003, Boston University - Department of Economics, revised Oct 2008.
  2. 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.
  3. Borghans, Lex & ter Weel, Bas & Weinberg, Bruce A., 2005. "People People: Social Capital and the Labor-Market Outcomes of Underrepresented Groups," IZA Discussion Papers 1494, Institute for the Study of Labor (IZA).
  4. 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.
  5. Thorsten Beck & Ross Levine & Alexey Levkov, 2007. "Big Bad Banks? The Impact of U.S. Branch Deregulation on Income Distribution," NBER Working Papers 13299, National Bureau of Economic Research, Inc.
  6. Lex Borghans & Bas ter Weel & Bruce A. Weinberg, 2014. "People Skills and the Labor-Market Outcomes of Underrepresented Groups," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 67(2), pages 287-334, April.
  7. 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.
  8. 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.
  9. Mario Izquierdo & Aitor Lacuesta, 2006. "Wage inequality in Spain: recent developments," Banco de Espa�a Working Papers 0615, Banco de Espa�a.
  10. 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.
  11. 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.

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