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The Career Evolution of the Sex Gap in Wages: Discrimination vs. Human Capital Investment

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  • David Neumark
  • Giannina Vaccaro

Abstract

Several studies find that there is little sex gap in wages at labor market entry, and that the sex gap in wages emerges (and grows) with time in the labor market. This evidence is consistent with (i) there is little or no sex discrimination in wages at labor market entry, and (ii) the emergence of the sex gap in wages with time in the labor market reflects differences between women and men in human capital investment (and other decisions), with women investing less early in their careers. Indeed, some economists explicitly interpret the evidence this way. We show that this interpretation ignores two fundamental implications of the human capital model, and that differences in investment can complicate the interpretation of both the starting sex gap in wages (or absence of a gap), and the differences in “returns” to experience. We then estimate stylized structural models of human capital investment and wage growth to identify the effects of discrimination (or other sources of a starting pay gap) and differences in human capital investment.

Suggested Citation

  • David Neumark & Giannina Vaccaro, 2020. "The Career Evolution of the Sex Gap in Wages: Discrimination vs. Human Capital Investment," NBER Working Papers 28191, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:28191
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    Cited by:

    1. Giannina Vaccaro & Maria Pia Basurto & Arlette Beltrán & Mariano Montoya, 2022. "The Gender Wage Gap in Peru: Drivers, Evolution, and Heterogeneities," Social Inclusion, Cogitatio Press, vol. 10(1), pages 19-34.

    More about this item

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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