David Graziano, Xiao Liang, Cory
Mohling, Andrew Reid, Ken Sulma,
Elizabeth Welch
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30 years of gender pay gap consistency
Between 1979 and 1989 female-to-male pay
ratio rose 9%
Convergence slowed in 1990’s rising only
3.5%
Dataset: Michigan Panel Study of Income
Dynamics (PSID)
◦ Only dataset that contains information on workers’
actual labor market experience
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Women’s increase in labor market
participation my have slowed in 1990’s
relative to 1980’s
Discrimination narrowed at a slower pace
◦ Concerns about glass ceilings
◦ Pay equivalence in certain occupations may have
already been achieved
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Labor force selection may causes changes in
observed wage differentials between men and
women.
◦ Wage data only available for labor force
participants
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Identify the causes of the slowdown in the
gender pay gap from 1980’s to 1990’s
Use accounting techniques to identify…
◦ Changes in the measured characteristics
◦ Changes in the price of measured characteristics
◦ Changes in the unexplained gender pay gap
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Measure
◦ Effects of unions
◦ Effects of selectivity
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Identify the size and drivers of the
“unexplained” gap
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Data
◦ Michigan Panel Study of Income Dynamics
◦ Salaried, Non-Agricultural workers (18-65)
◦ Values obtained from 1979,1989, & 1998 data
set
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Unequal lengths in data (10 and 9 years)
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Compared to Current Population Survey (CPS)
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Trends remained same in both studies
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Pay gap fell substantially faster in 1980s than 1990s
Female/Male pay ratio
◦ 63% in 1979
◦ 74% in 1989
◦ 80% in 1998
Females out-earned males:
◦ 24% in 1979
◦ 35% in 1989
◦ 39% in 1998
Pay ratio fell over all earnings levels
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Price changes over time could affect women
either positively or negatively
Human capital of women was lower than men
and therefore lower returns to experience
Technological advances benefited women, in
terms of gap, but also increased male wage
Union effects and removal
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Looked at non-agricultural employees ages
18-65
Excluded outliers
◦ Excluded women who made less than $1 and over
$250 per hour
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Looked for the “unexplained gap”
◦ Gap after accounting for differences
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Gender wage ratio
◦ 70.8%
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81.8%
81.2%
Relative experience levels resulted in 5.3%
decrease in wage gap between 1970-1990
◦ 1/3 of total decline
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Gender gap in years of experience decreased
from 2.3 years to 1.6 years
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Deunionization from 80’s to 90’s accounted
for 2.4% to 8.9%, which was a 27% decrease
◦ Men moved out of unionized labor
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Saw that the slowing gap convergence was
statistically significant
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Few women in market place.
Percentage of working women fluctuates a lot
more than men.
Does this cause the gender pay gap slow
down to be misleading?
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Full-Time workers only:
◦ Women: 41-53%
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Add Part-Time workers:
◦ Women: 68-77%
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Men: 92-94%
Add Workers with wages in PSID
◦ Women: adds 10-13%
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Men: 80-83%
Men: adds 4-5%
Make assumptions based on experience and
education (above or below the median)
◦ Women: 86-91%
Men: 96-98%
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High percentage of women in labor force
were high skilled in the 80’s
◦ Returns to skill
◦ Made gap appear to close faster
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More low skilled women entered in 90’s
◦ Divorce rates
◦ Single families
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Selection bias explains 10% of the gap closing
from 1979-98 (ceteris paribus)
Unmeasured
Characteristics
2. Labor Market
Discrimination
1.
Unmeasured Characteristics
◦ Women’s commitment to labor market
increased more in 1980s
◦ Gender gap in housework declined more
in 1980s than 1990s
2. Discrimination
◦ 1991 civil rights legislation seems
contradictory
◦ Employer’s perceptions changed more in
1980s
◦ Glass ceiling effect
1.
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Changes in supply and demand were not
included in the data
Indexes may not be accurate
Demand shifted within industries
Increase in computerization in 1980s more
than 1990s
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Female / Male Hourly Pay Ratio
Procedure - Decomposed Method
Results
Key findings:
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Human Capital
Labor Force Selectivity
Labor Market Discrimination
Supply and Demand Shifts