Chapter 8: Women’s Earnings, Occupations, and the Labor Market Year 2002: –FT employed females earned 77.5% of FT employed males. –Female wage growth more than twice inflation; –Male wage growth less than inflation. Sources of differences: –1) Human capital –2) Occupation –3) Compensating Differentials (?) –4) Discrimination

Data on Earnings Differences See Table 8.1: –2001 data by sex and race/ethnicity. See Figure 8.1: –shows time trend in sex earnings ratio. See Figure 8.2: –Age-earnings profiles for college grad and HS grad.

Research by Blau and Kahn (2001) Source of improvement in gender earnings ratio: –1) better economic status of new LF entrants; –2) better conditions for persons already working as they progress thru careers. Table 8.2: –Data: CPS data on FT workers –Read across row: how same-aged successive cohorts fare. –Top Panel: Read diagonally: follow same cohort as it ages 10 years. –Bottom panel: %  over time: While each successive group of women fared better than its predecessors, something happens at about ages that hurts women’s earnings relative to men’s earnings.

Further Detail on Gender Earnings Gap Figure 8.2: annual earnings ratio by education level. –Point of breakdown by education is to eliminate one logical source of gender earnings differences. –See little variation for different education levels (except for professional degrees). Figure 8.3: distribution of earnings: –See congestion of women at very low earnings. Table 8.3: international differences in gender earnings ratio and changes over time. –See US ratio is low in 1 st period. –At end: US in middle: its gap rose most during this period.

Occupational Segregation Definition: crowding of men into “men’s jobs” and women into “women’s jobs” Table 8.4: 3-page table showing the percentage of workers in each occupation that are female. Duncan Index: a summary measure for an economy used to measure the degree of occupational segregation. S = ½ *  i  M i - F i  M i, F i are % males/females in LF who work in occupation i. If no occup segregation, M i = F i and so the difference = 0 so S=0. If much segregation, M i – F i is a big number and so S is large. With complete segregation, S = 100. S = % M or W who would have to change occupation to eliminate segregation.

Compensating Wage Differentials Helps to explain why wages may be different for different occupations even if it appears as though same skills required of workers. Definition: wage differences that compensate for differences in job characteristics across occupations. These job characteristics can be both good and bad characteristics: –Risk of injury –Physical comfort –Job flexibility

Key to compensating wage differential model: changes underlying assumption of standard labor market model of homogeneity of jobs/workers. Now workers and jobs differ and individuals sort themselves into jobs that best suit their preferences Result: –1) wages differ –2) wage difference not as big as might be expected. Relates to comparable worth argument: –Equal pay for jobs of equal value: assumes market fails in wage-setting BUT market does account for worker/job heterogeneity, which is hard to replicate by job evaluations. –May explain some of gender wage gap but empirical evidence inconclusive.