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The Closing of the Gender Gap as a Roy Model Illusion

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Author Info
Casey B. Mulligan
Yona Rubinstein

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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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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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Find related papers by JEL classification:
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. 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). [Downloadable!]
    Other versions:
  2. Olivetti, Claudia & Petrongolo, Barbara, 2006. "Unequal Pay or Unequal Employment? A Cross-Country Analysis of Gender Gaps," CEPR Discussion Papers 5506, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Mario Izquierdo & Aitor Lacuesta, 2007. "Wage inequality in Spain - recent developments," Working Paper Series 781, European Central Bank. [Downloadable!]
  4. 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. [Downloadable!]
  5. 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. [Downloadable!] (restricted)
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