Movin’ on up: Hierarchical occupational segmentation and gender wage gaps

Our study evaluates and extends existing wage decomposition methodologies that seek to measure the contributions of endowments, pure wage discrimination, and job segregation. We employ data from a regional supermarket that faced a Title VII class-action lawsuit to examine how standard wage specifications integrated with a model of hierarchical segregation might perform in wage decompositions. Our results show that a common misspecification of the wage structure leads to false inferences about the presence of pure wage discrimination. We demonstrate the generalizability of our methodology using CPS data.     

FEAR AND LATHING IN THE MICHIGAN FURNITURE INDUSTRY: EMPLOYEE-BASED DISCRIMINATION A CENTURY AGO

We analyze employee-based discrimination using historical data on workers attributes from Michigan's furniture industry. The data provide compelling evidence of employee-based discrimination in the form of a compensating wage differential. A one percentage point decrease in the share of the work force from the worker's own ethnic group increased the wage about 0.1 percent. This response was larger in small firms, in small towns, and among certain ethnic groups. Protestants were generally paid more to work with Catholics. The additional labor costs generated by employee-based discrimination were probably offset by several benefits which rendered complete segregation unnecessary.     

The economic marginality of ethnic minorities: an analysis of ethnic income inequality in Singapore

This paper examines ethnic income inequality in Singapore from the perspectives of labour‐market segmentation and human capital. The findings of this study show that neither perspective is useful in explaining ethnic income inequality in Singapore. Further, the analysis shows that educational differences among the Chinese, Indians and Malays account for very little of the income gap. Much of the income difference is due to discrimination. The source of this discrimination lies in the segregation of ethnic minorities in lower‐paying jobs and occupations across all industries, reflecting Chinese domination in the economic and political spheres.     

The Allocation of Black Workers into the Public Sector

Abstract

This study examines the effects of individual and structural factors on the odds that a black worker will be employed in the public sector (federal or state-local government) rather than the private sector. The independent variables include human capital, gender, citizenship, and the structural features of the labor markets (metropolitan areas) in which these workers reside (percent black, residential segregation, geographic region). The study focuses on percent black and residential segregation, two variables which significantly influence discrimination, group power and the employment opportunities of black workers. Logistic regression shows that, controlling for other factors, the odds of black employment in the public sector are highest in metropolitan areas that have large black populations and relatively low levels of residential segregation. These findings indicate that the allocation of black workers into the public sector results from processes of both discrimination and group power. The implications of the findings for the future prospects of black Americans to advance economically through public sector employment are discussed.     

Racial wage differentials among young adults: Evidence from the 1990s

This study seeks to decompose wage differentials between black and white male young adults into those related to labor market discrimination and those resulting from human capital endowments. The importance of testing for significant differences in wage equations before conducting decomposition analysis is emphasized. Study results demonstrate that ignoring correction for the sample selection bias resulting from black-white differences in the probability of being employed would lead to an underestimation of the size of wage differentials. The study also shows that the results of models based on different assumptions regarding the nondiscriminatory wage structure might lead to different conclusions pertinent to the extent of labor market discrimination. Implications for public policy development are discussed. His current research interests include consumption economics, income distribution, and international comparative analyses of households' resources allocation. He received his Ph.D. from the University of Missouri at Columbia. Her current research interests include family financial distribution and wellbeing and individual and family resource management. She received her Ph.D. from Iowa State University.     

Occupations,Human Capital and Skills

Economists have long recognized that occupations can be used as proxies for skills in wage regressions. Yet the potential existence of non-market factors such as discrimination and occupational choice (sorting) on the basis of job attributes that are separate from, but potentially correlated with, wages makes occupations an imperfect control for skills. In this paper, we consider whether inter-occupational wage differentials that are unexplained by measured human capital are indeed due to differences in unmeasured skill. Using the National Compensation Survey, a large, nationally-representative dataset on jobs and ten different components of job requirements, we compare the effects on residual wage variation of including occupation indicators and these skill requirements measures. We find that although these skill requirements vary across 3-digit occupations, occupation indicators decrease wage residuals by far more than can be explained by skill alone. This indicates that “controlling for occupation” does not equate to controlling for only these skill measures, but also for other factors. Additionally, we find that there is considerable within-occupation variation in skill requirements, and that the amount of variation is not constant across skill levels. As a result, including occupation indicators in a wage model introduces heteroskedasticity that must be accounted for. We suggest that caution be applied when using and interpreting occupation indicators as controls in wage regressions.     

Sticky floors and glass ceilings in Latin America

We employ unconditional quantile-decomposition methods to analyze the gender wage gap (gwg) in the urban region of twelve Latin American countries. Using data from harmonized household surveys we decompose the gwg into an explained component (differences in human capital) and an unexplained component (different rates of return to human capital). We find evidence of sticky floors (larger gwg at the tenth percentile than at the median) and glass ceilings (larger gwg at the ninetieth percentile than at the median). The former are more frequent and their magnitude is generally larger. Working women are more educated than working men all along the wage distribution, which partially hides the ‘unexplained’ pay difference. Finally, we find that poorer countries and countries with more income inequality have higher gwg at the tenth percentile of the wage distribution. Richer countries and countries with lower inequality present larger gwg at the ninetieth percent of the wage distribution.     

CAN THE HUMAN CAPITAL APPROACH EXPLAIN LIFE‐CYCLE WAGE DIFFERENTIALS BETWEEN RACES AND SEXES?

Using data from the National Longitudinal Survey of Youth–1979 cohort (NLSY79), this paper shows the importance of postschool human capital investment in describing both gender and racial wage gaps. The empirical results suggest that male-female wage gaps, regardless of race, are mainly caused by gender differences in the human capital production process; generally, men gain more work experience and therefore have lower marginal costs of human capital production. Black-white lifetime wage differentials could partly result from higher implicit interest rates for blacks, while the deterioration of black males' relative economic status as they age can be attributed to higher depreciation rates of their human capital stock. ( JEL J24, J30, C61)     

THE IMPACT OF PSYCHOLOGICAL AND HUMAN CAPITAL ON WAGES

Historically, economists have taken the position that psychological capital is either unobservable or immeasurable; thus, heretofore, little evidence has been available on the contribution of psychological capital to wages. Using data drawn from two different waves of the National Longitudinal Survey of Youth, we offer evidence that psychological capital has both a direct effect—via self-esteem—and an indirect effect—through locus of control—on an individual's real wage. We find a person s wage is more sensitive to changes in self-esteem than to comparable alterations in human capital. Both relative wages and human capital contribute to self-esteem.     

The relative centrality of life domains among Jews and Arabs in Israel: the effect of culture,ethnicity, and demographic variables

The centrality of major life domains (work, family community leisure and religion) have not, to date, been studied among Arabs in Israel. This paper examines life domains centrality of 909 Jews and 286 Arabs (or Palestinians that have Israeli citizenship), who work in the Israeli labor market. The findings reveal significant differences in the importance of all life domains. Work centrality, as well as the importance of religion and community is significantly higher among Arabs than among Jews. Among Jews, the importance of family and leisure are significantly higher than among Arabs. A hierarchical regression analysis indicates that demographic variables have a low ability to explain the differences in the centrality of life domains among Jews and Arabs. The findings can be explained by cultural differences, the high degree of segregation, occupational discrimination, and mainly by the regional Palestinian/Arab-Israeli conflict.     

OPTIMAL WAGE TAXATION WHEN HUMAN CAPITAL AND EMPLOYMENT ARE ENDOGENOUS

This paper studies how optimal wage tax conclusions from the classic two‐period life cycle model of human capital accumulation are affected by endogenizing the number of taxpaying workers. In the absence of a corrective policy, young individuals underinvest in human capital from a social perspective because tax premiums for transfers to nonworkers are not actuarially adjusted downward for human capital attainment. A combination of wage taxes and wage subsidies can restore proper price signals. Numerical simulations suggest that even modest employment elasticities can be sufficient to substantially impact the magnitudes and even the signs of optimal wage tax rates. (JEL H21, H3, J24)     

Skill-biased technical change, educational choice, and labor market polarization: the U.S. versus Europe

This paper analyzes the effect of recent technical change on the labor market and explains the observed differences in wage inequality among advanced countries. In particular, we focus on the difference between the inequality in the U.S. and in continental Europe. Many studies have indicated a rise in wage inequality in the U.S. over the past three decades. On the other hand, there has been little change in wage inequality in continental Europe. By introducing human capital investment into the model by Acemoglu (Am Econ Rev 89:1259–1278, 1999), we show that ex ante homogeneous economies would have distinct ex post wage distribution. The strategic complementarity between human capital investment and firms’ hiring strategies yields the possibility that multiple equilibria exist, which explains the difference in wage distribution between the U.S. and Europe. In addition, we show that differences in tax or education systems can explain the difference in wage distribution between the U.S. and Europe.     

THE ACCUMULATION OF HUMAN CAPITAL DURING MARRIAGE BY MALES

Married males have significantly higher wage rates than never-married, widowed, or divorced males, even when differences in educational attainment, experience, race, and so on are controlled for. Evidence presented in this paper suggests that most of the unexplained wage differential associated with marital status in earnings regressions results from males accumulating human capital more rapidly when they are married than when those same males are not married. The hypothesis that married males earn more than unmarried males because marriage facilitates the financing of human capital accumulation is supported by this and other evidence.     

Occupational Human Capital and Wages: The Role of Skills Transferability Across Occupations

This paper examines the effect of accumulated human capital, and particularly occupational human capital, on the workers’ wages. Unlike previous studies that apply occupational tenure as a proxy for occupational human capital, this paper applies the concept of Shaw’s (1984) occupational human capital to capture the transferability of occupational skills and estimates a new measure of occupational human capital, so-called occupational investment. Using the National Longitudinal Survey of Youth (NLSY) from 1979 to 2000, the key findings of this paper suggest that occupational skills from the previous jobs can also affect the workers’ wages at the current job and that occupational investment is one of the important sources of wages supporting the Shaw’s original work on wage determination. Specifically, 5 years of (3-digit) occupational investment relative to current occupational tenure could lead to a wage increase of 7.7 to 18.4 %. I also find that the general labor market experience accounts for a large share of workers’ wages.     

ARE WORKERS WILLING TO PAY TO JOIN A BETTER TEAM?

Using data from the Major League Baseball free‐agent market, this study is the first to show that the productivity expected of the team a worker will join produces a significant, negative compensating wage differential. The younger workers in the sample drive this result, trading 25% of their wages to join teams with an expected productivity one standard deviation higher. This investment can be recouped if a reasonable increase in human capital occurs. These results are robust to contract length‐wage simultaneity and indicate that investment in human capital motivates the observed tradeoff, suggesting a new pathway through which human capital accumulation can affect wages. Reliable measures of workers' own past productivity and the productivity expected of a worker's future team provide key advantages to identifying these effects. (JEL J31, J24, M54)     

ARE ESTIMATES OF SEX DISCRIMINATION BY EMPLOYERS ROBUST? THE USE OF NEVER-MARRIEDS

Current decomposition estimates of sex discrimination by employers are not robust. Many "unobservables," like motivation and attitudes toward work, are left unmeasured. We estimate sex discrimination with two plausible methods of controlling for a major unobservable, acceptance of male and female traditional roles in the household. The methods offer enormously different estimates of sex discrimination. One estimates sex discrimination at over 61 percent of the female wage, the other finds little sex discrimination and possibly favoritism toward women. The range in estimates is so large that point estimates of sex discrimination by employers are of little use to policymakers.     

Intangibles and the Gender Wage Gap: An Analysis of Gender Wage Gaps Across Occupations in the Finnish Private Sector

The paper compares the gender wage differentials of two occupation groups—innovation and non-innovation workers—separately for manufacturing and services using Finnish private-sector data. We apply a decomposition method based on unconditional quantile regression techniques to identify key factors underlying the gender wage gaps observed along the whole wage distribution, as well as changes in these wage gaps between 2002 and 2009. This more nuanced approach provides important new insights. We find conspicuous differences in average gender wage gaps, in gender wage-gap profiles across the wage distribution and also in the evolution of gender wage differentials over time between sectors and occupation groups. Our results imply that sector-specific factors are a more important driving force behind these differences in patterns and trends of gender wage gaps, although occupation-specific factors cannot be totally dismissed. Hence, comparisons of gender wage gaps, including their underlying sources, of innovation and non-innovation workers for too broadly defined segments of the labour market may result in misleading conclusions concerning the factual role of intangible capital.     

Social and Economic Structural Antecedents of Fertility*

Social and economic structural characteristics of counties are used to predict differences in county fertility rates using 1970 census data for North Carolina's one hundred counties. We argue that fertility rates are affected by county social and economic structures, and hypothesize that fertility rates vary directly with level of occupational sex segregation and inversely with degree of urbanization, industrialization, population size, and female labor force participation rates of counties. Variables reflecting general sociodemographic characteristics of counties are also included in the analysis. Using multiple linear regression and factor analytic techniques, a preliminary model of social and economic structural antecedents of fertility is constructed. Three factors, which collectively account for 69 percent of the variance in fertility rates, are indicative of the importance of social and economic structural conditions in accounting for variation in local fertility.     

Using education to reduce the wage gap between men and women

Using a theoretical model we analyzed the decision of men and women to acquire human capital in the form of extra education. We found that women tend to seek higher levels of education than men in an attempt to reduce the wage gap between themselves and their male peers. We also showed that for women with strong abilities, this strategy is an effective one.