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What Do Wage Differentials Tell Us about Labor Market Discrimination?

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  • June E. O'Neill
  • Dave M. O'Neill

Abstract

We examine the extent to which non-discriminatory factors can explain observed wage gaps between racial and ethnic minorities and whites, and between women and men. In general we find that differences in productivity-related factors account for most of the between group wage differences in the year 2000. Determinants of wage gaps differ by group. Differences in schooling and in skills developed in the home and in school, as measured by test scores, are of central importance in explaining black/white and Hispanic/white wage gaps among both women and men. Immigrant assimilation is an additional factor for Asians and workers from Central and South America. The sources of the gender gap are quite different, however. Gender differences in schooling and cognitive skills as measured by the AFQT are quite small and explain little of the pay gap. Instead the gender gap largely stems from choices made by women and men concerning the amount of time and energy devoted to a career, as reflected in years of work experience, utilization of part-time work, and other workplace and job characteristics.

Suggested Citation

  • June E. O'Neill & Dave M. O'Neill, 2005. "What Do Wage Differentials Tell Us about Labor Market Discrimination?," NBER Working Papers 11240, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:11240 Note: LS
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    1. Sanders Korenman & David Neumark, 1991. "Does Marriage Really Make Men More Productive?," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 282-307.
    2. Kenneth Arrow, 1971. "The Theory of Discrimination," Working Papers 403, Princeton University, Department of Economics, Industrial Relations Section..
    3. Jane Waldfogel, 1998. "Understanding the "Family Gap" in Pay for Women with Children," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 137-156, Winter.
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    Cited by:

    1. Peter McHenry & Melissa McInerney, 2012. "Are Wage Premiums for Black Women Illusory? A Critical Examination," Working Papers 120, Department of Economics, College of William and Mary.
    2. Hélène Perivier, 2007. "Les femmes sur le marché du travail aux États-Unis - Une mise en perspective avec la France et la Suède," Documents de Travail de l'OFCE 2007-07, Observatoire Francais des Conjonctures Economiques (OFCE).
    3. David Bravo Urrutia & Sergio Urzúa & Claudia Sanhueza, 2007. "Is There Labor Market Discrimination Among Professionals In Chile? Lawyers, Doctors And Business-People," Working Papers wp264, University of Chile, Department of Economics.
    4. Pierre-André Chiappori & Murat Iyigun & Yoram Weiss, 2009. "Investment in Schooling and the Marriage Market," American Economic Review, American Economic Association, vol. 99(5), pages 1689-1713, December.
    5. Olaf Hübler & Lukas Menkhoff, 2011. "Do Women Manage Smaller Funds?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(1), pages 107-126, February.
    6. Martin Huber, 2015. "Causal Pitfalls in the Decomposition of Wage Gaps," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 33(2), pages 179-191, April.
    7. Chad R. Wilkerson & Megan D. Williams, 2006. "Minority workers in the Tenth District: rising presence, rising challenges," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 31-59.
    8. Hélène Périvier, 2008. "Les femmes sur le marché du travail aux Etats-Unis," Sciences Po publications 2008-12, Sciences Po.
    9. César Vladimir Martínez Arango & Coralia Azucena Quintero Rojas & Lari Arthur Viianto, 2015. "Discriminación de género en redes laborales," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 1-34, November.
    10. David Bravo & Claudia Sanhueza & Sergio Urzua, 2008. "Discriminación en el mercado laboral entre profesionales de Chile. Abogados, Médicos y gente de negocios," Research Department Publications 3249, Inter-American Development Bank, Research Department.
    11. Francesco Renna & Randall King, 2007. "The Impact of Racial Discrimination on the Early Career Outcomes of Young Men," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 35(3), pages 269-278, September.
    12. Jonathan Fisher & Christina Houseworth, 2012. "The reverse wage gap among educated White and Black women," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(4), pages 449-470, December.

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    JEL classification:

    • J0 - Labor and Demographic Economics - - General

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