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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.

Suggested Citation

  • Casey B. Mulligan & Yona Rubinstein, 2004. "The Closing of the Gender Gap as a Roy Model Illusion," NBER Working Papers 10892, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:10892
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. Borghans, Lex & Weel, Bas ter & Weinberg, Bruce A., 2005. "People People: Social Capital and the Labor-Market - Outcomes of Underrepresented Groups," Research Memorandum 002, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    3. Lex Borghans & Bas Ter Weel & Bruce A. Weinberg, 2014. "People Skills and the Labor-Market Outcomes of Underrepresented Groups," ILR Review, Cornell University, ILR School, vol. 67(2), pages 287-334, April.
    4. Claudia Olivetti & Barbara Petrongolo, 2008. "Unequal Pay or Unequal Employment? A Cross-Country Analysis of Gender Gaps," Journal of Labor Economics, University of Chicago Press, vol. 26(4), pages 621-654, October.
    5. 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;European Society for Population Economics, vol. 25(2), pages 511-543, January.
    6. KAWAGUCHI Daiji & NAITO Hisahiro, 2006. "The Bound Estimate of the Gender Wage Convergence under Employment Compositional Change," ESRI Discussion paper series 161, Economic and Social Research Institute (ESRI).
    7. 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.
    8. 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.
    9. Beck, Thorsten & Levine, Ross & Levkov, Alexey, 2007. "Big bad banks ? the impact of U.S. branch deregulation on income distribution," Policy Research Working Paper Series 4330, The World Bank.
    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. Marigee P. Bacolod & Bernardo S. Blum, 2010. "Two Sides of the Same Coin: U.S. "Residual" Inequality and the Gender Gap," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
    12. Mario Izquierdo & Aitor Lacuesta, 2006. "Wage inequality in Spain: recent developments," Working Papers 0615, Banco de España;Working Papers Homepage.
    13. Patrick Bayer & Kerwin Kofi Charles, 2016. "Divergent Paths: Structural Change, Economic Rank, and the Evolution of Black-White Earnings Differences, 1940-2014," NBER Working Papers 22797, National Bureau of Economic Research, Inc.
    14. Martha Claudia Rodríguez Villalobos & Erick Rangel González, 2015. "¿Tener obesidad es realmente una desventaja en el mercado laboral mexicano?," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 35-62, November.
    15. 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.

    More about this item

    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; Quantile Regressions; Social Interaction Models

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