Revisiting Occupational Segregation and the Valuation of Women’s Work

While population ageing increases the demand for care work, new technologies, including AI, reinforce the importance of human interaction, with recent research finding significant wage premiums for social skills. Against this background, we investigate two factors behind the gender wage gap: occupational gender segregation and lower pay in female-dominated occupations, especially care work, where social skills are central. Using 1972-2024 CPS data, we show that occupational gender segregation remains pronounced in the United States, with many care occupations remaining female-dominated. This continues to correlate with lower wages. Conditional on observable characteristics, a 1 percentage point increase in the occupational share of women during 2015-24 was associated with a wage decrease of 0.22 percent for women and 0.20 percent for men. We then analyze whether returns to social skills are distorted in the care sector, where we hypothesize that the wage returns on workers' performance are lower due to the public-goods aspect of care work. Based on combined CPS and O*Net data, we investigate occupation-level skills returns for 2015-24. They are indeed insignificant for care workers but sizeable for business services workers.