Native‐Migrant Wage Differential Across Occupations: Evidence from Australia

We investigate wage differential by migrant status across white‐collar and blue‐collar occupations in Australia. Migrants are observed to have a higher wage; this difference, however, does not exist once we control for covariates. The unconditional wage differential varies over wage distribution as well as by occupation. Significant wage differentials are found above the median: positive for white‐collar workers and negative for blue‐collar workers. Using recently developed decomposition methods based on Firpo, Fortin, and Lemieux (2009) we decompose wage differentials across their distribution. Overall, the wage advantage of migrants reflects their superior labour market characteristics, and in particular, their levels of education. We find that English language proficiency plays an important role in wage differences among immigrants from non‐English speaking countries.     

The Gender Wage Gap in the United States and Cross Nationally

Scholarship in sociology and economics has long explored the gender wage gap. Recent research suggests that these inequalities are indicative of important differences not only between men and women, but among women and men, reflecting rising levels of income inequality among workers in the post‐industrial era. We argue that the most interesting debates in the gender wage gap – those exploring differences among subgroups by class, race, and/or parenthood status (such as the motherhood wage penalty), as well as those considering differences across countries – can bring new insights to the study of wage inequality, as well as to understandings of what drives gendered wage inequality.     

Inter‐country wage differences in the European Union

This article investigates the determinants of wage gaps between European Union countries along the wage distribution, applying the methodology proposed by Firpo, Fortin and Lemieux (2009) and Fortin, Lemieux and Firpo (2011). The authors conclude that both wage structure and composition effects contribute to explaining wage differentials, but that the wage structure effect is more important. This latter effect would appear to derive from differences between unknown factors, while the composition effect can largely be explained by differences in the following areas: education, proportion of workers with supervisory responsibilities, occupational structure, and, to a lesser extent, industrial structure.     

Two Components of Wage Gaps Induced by Individual-level Variables: Intra-firm or Inter-firm?

Individual-level variables such as gender, education, occupation, and employment type are well-known factors that induce wage gaps in the labor market. This article aims to divide wage gaps into two components—those arising within each firm (the intra-firm wage gap) and those arising between different firms (the inter-firm wage gap)—and measure their respective proportions by individual-level variables, as studies suggest that each wage gap based on an individual-level variable has a unique mix of an intra-firm and inter-firm wage gap. This measurement can help enrich investigation into the generative process of wage gaps and formulate effective labor policies to reduce them. Accordingly, we compared the coefficients of the independent variables of the wage function estimated by a pooled ordinary least squares model and a fixed-effect model, using nationwide employer–employee matching data collected by the Japanese government. We found that wage gaps by gender and employment type mostly consist of intra-firm wage gaps, and those by education and occupation have a larger share of inter-firm wage gaps. The findings suggest that different research strategies are required to investigate the generative process of each wage gap, and that regulations on and interventions in organizational processes are important to reduce wage gaps based on gender and employment type.     

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.     

Visualising Gender Wage Differences in the European Union

The purpose of this article is to illustrate differences in the gender wage gap in 13 EU member states, using figures taken from the Household Panel for 2000. The methodology is based primarily on the kernel density functions of men's and women's wages. A range of situations can be observed from the Mediterranean countries (with a smaller gender pay gap) to the very specific cases of Austria and the UK and to northern European countries where the gender pay gap is chiefly the result of a larger proportion of men at higher‐paid levels. We also offer conclusions on the relevance of public employment, part‐time employment and short‐term hiring to explain the gender wage gap in each of the countries studied.     

A Note on Selection and Gender Unemployment Gaps

Previous research has documented the impact of positive selection into employment on the ranking of countries by gender wage gaps. This note focuses on the impact of selection into labor force on cross-country differences in gender unemployment gaps. We construct the Manski bounds for the selection-free gender unemployment gaps in 26 EU countries and show that - without additional assumptions - the observed gender unemployment gaps carry little information about the selection-free gender differences in unemployment. Contrary to the common assumption of positive selection into labor force (similar to positive selection into employment documented in the gender wage gap research), we also point at an example of negative-selection bias. We show that labor force withdrawal of mothers on job-protected family leaves may lead to an overestimation of the selection-free gender unemployment gaps by as much as 1 p.p.     

What determines wage differentials across the EU?

We analyse determinants of the wage differentials observed between thirteen European countries using the European Community Household Panel (ECHP). The empirical decomposition is based on a proportional hazards model. The approach based on rank invariant estimators is borrowed from the literature on failure time data and has been adapted by Donald et al. (Rev Econ Stud 67:609–633, 2000) to analyse differences in wage distributions. Extending this approach and using natural splines to allow for nonlinear regression effects we isolate three different underlying forces for wage differentials: differences in characteristics, differences in weights of characteristics and differences in the returns-to-skill functions. The analysis reveals that country differences in returns-to-skill functions contribute most to observed wage differences while differences in observed characteristics contribute surprisingly little.     

Women’s Tertiary Education Masks the Gender Wage Gap in Turkey

This paper investigates the gender wage gap for full-time formal sector employees, disaggregated by education level. The gap between the labor force participation rate of women with tertiary education and those with lower levels of education is substantial. There is no such gap for men. Hence, existing gender wage gap studies for Turkey, where we observe lopsided labor force participation rates by education levels, compare two very different populations. We disaggregate the whole sample by education level to create more homogenous sub-groups. For Turkey, without disaggregation, the gender wage gap was 13% in 2011, and women are significantly over-qualified relative to men on observed characteristics. Once we disaggregate the sample by education level, we show that the gender wage gap is 24% for less educated women and 9% for women with tertiary education in full-time formal employment. Observed characteristics only explain 1 % of this gap in absolute terms. We further disaggregate the data by public and private employment. The gender gap is higher in the private sector. However, women with tertiary education in the public sector are significantly better qualified compared to men, and consequently the adjusted gender wage gap is higher for women with tertiary education in the public sector. Our estimates also indicate a rise in the gender wage gap between 2004 and 2011.     

The Gender Wage Gap in Belarus

A new release of the Belarusian Household Survey on Incomes and Expenditures provides the unique opportunity for an in-depth study of the gender pay gap in Belarus. The econometric analysis involves estimates of augmented earnings equations, also corrected for sample selection bias, as well as for least absolute deviations estimates at different quantiles of the wage distribution. The results suggest that the gender wage gap is smaller than in other countries of the Commonwealth of Independent States and Central and Eastern European countries, as one would expect considering the slow transition process, and is reduced after controlling for unobservable characteristics. Moreover, the gap increases as one moves from the 10th to the 90th quantile. This means that having jobs providing generally higher levels of wages for a woman, it is more and more difficult to get the same wage as that of a man.     

Union Worker Wage Effect in the Public Sector

This study examines union wage premiums in the public sector for the 1998–2004 period. Unlike previous studies, our approach estimates union wage premiums considering differences in the rewards to education, experience, and other personal characteristics for union and non-union workers. The approach provides a larger estimated wage gap than the traditional approach, and allows for simulations of union–nonunion wage gaps for different types of workers. Moreover, we use an Oaxaca decomposition to explain the larger union–nonunion wage gap in the private sector in comparison to that in the public sector. We find that between 50% and 60% of the difference in union wage premiums between the private and public sectors is due to differences in the way unionized workers are rewarded in the private and public sectors, while the remaining portion is due to differences in personal characteristics of private and public sector workers.

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)     

Comparative advantage and the welfare effects of uniform wage policies

This paper analyzes the theoretical impact of a commonly cited union goal — the elimination or reduction of wage differentials within occupations. By dropping the usual assumption of homogeneous labor, we show how, and under what market conditions, workers will receive rents due to individual comparative advantage. In competitive labor markets a union-imposed uniform wage may lower the earnings of workers holding a productive advantage, causing a reduction in employment and a welfare loss of comparative advantage rents. The implications of a strict uniform wage rule imply that unions may be forced to adapt their wage policy to allow more productive workers to receive wage differentials. This consideration helps explain some common trade union institutions.     

Examining Equality between Public- and Private-Sector Wage Distributions

Most comparability studies examine average pay differences, but this article explores differences in the distribution of public- and private-sector wages. Applying a new type of decomposition method, the results indicate that the difference in average wages is only a small part of wage incomparability, whereas differences in the variance of the differential are a much more important factor explaining incomparability. Further results find that differences in wage structure and unobservable factors determining wages have distinct effects in different parts of the wage distribution.     

Wage Differentials of Transportation Industries: Deregulation Versus Regulation

This article investigates the wage differentials of similar occupations in three for-hire transportation carrier industries, railroad, truck, and motor bus, under regulation and deregulation. The estimation results indicate that the union wage gaps among all occupations have widened under deregulation. Specifically, the union wages of railroad occupations have increased relative to those of truck drivers and the union wages of truck drivers have increased relative to those of motor bus drivers. Further, wage gaps for all occupations for this period are greater among nonunion than among union workers.     

Gender Differences in Unemployment Dynamics and Initial Wages over the Business Cycle

Using administrative data from Spanish Social Security for the period 2002–2013, we explore differences between unemployed men and women in: their probabilities to find a job, their initial wages if they find a new job, and the likelihood to fall back into unemployment. We estimate bivariate proportional hazard models for unemployment duration and for the consecutive job duration for men and women separately, and decompose the gender gap using a non-linear Oaxaca decomposition. Gender differentials in labour market outcomes are procyclical, probably due to the procyclical nature of typically male occupations. While a higher level of education protects women in particular from unemployment, having children hampers women’s employment and initial wages after unemployment. There are lower gender gaps in the public sector and in high technology- firms. Decompositions show that the gender gaps are not explained by differences in sample composition. Indeed, if women had similar characteristics to men, the gender gap would be even wider.     

Gender ideology, division of housework, and the geographic mobility of families

The paper studies the relevance of gender ideology for the geographic mobility of families using data from the German Socio-economic Panel. The analysis proceeds in two steps. First, it is shown that single men and women—who are in some sense “unconstrained” optimizers—reveal identical mobility patterns. There are no fundamental gender differences in the inter-regional mobility of German singles. Second, I focus on dual-earner households and split this group into “traditional” and “egalitarian” couples using information on their factual division of housework rather than their reported gender ideology. Separate migration analyses for both groups reveal important differences indicating the significance of gender ideology in families’ migration behavior: job-related characteristics of men statistically dominate those of women in traditional couples, whereas in egalitarian couples, male and female characteristics have the same effect on family migration behavior, i.e. there is no gender bias. Failure to account for the heterogeneity in gendered family roles across families thus misses an important explanatory factor in migration research.      

The Effects of First Occupation on Long Term Health Status: Evidence from the Wisconsin Longitudinal Study

In this paper, we use a longitudinal survey that has collected information for 50 years on a large cohort of Wisconsin high school graduates and their siblings to examine the long term impact of early occupational choice on health status. We find evidence that beginning a career in a blue collar occupation is correlated with several measures of poor health outcomes at ages 50–65. Since our dataset includes usually unobserved pre-labor market characteristics, including IQ and childhood health status, we can show that controlling for these variables is important for many results and suggests a high level of selection into occupation based on health and ability. We also provide evidence of gender differentials in the association between first occupation and later health. Then, we replace our basic measure of occupational categories with summary measures of job characteristics and find that employment at “bad jobs” at the beginning of an individual’s career predicts later health outcomes. Finally, we use sibling information in the dataset to show that unmeasured family background factors explain a large share of the effects of occupation on later health. Overall, the evidence points to limited, though heterogeneous, long term effects of health from blue collar employment.     

Wage distribution and firm size: The case of the United States

Substantial literature has been produced on the increasing wage gap in the United States, invoking various possible factors, but largely ignoring the relationship between firm size and wage distribution. In this study, the author decomposes wage differences over time between large, medium and small firms, identifying the effects of observed characteristics (and their returns) along with residual inequality, i.e. inequality among workers with the same observed characteristics. From 1992 to 2012, trends at small, medium and large firms became more uniform, while wage inequality rose across the board. Significantly, it increased more quickly in the upper half of the wage distribution and at large firms, where residual inequality was highest.     

Gender and racial earnings differentials in academic labor markets

This study estimates earnings differentials across racial and gender groups among college faculty, and decomposes these differentials into the components attributable to differences in individual and institutional characteristics and that which remains unexplained. We find that white females earn approximately 4 percent less than white males; black males earn 7.4 percent more; black females earn one percent more; Hispanic males earn 2.7 percent more; Hispanic females earn 1.7 percent less; and Asian males earn 7.7 percent more than comparable white males. We also find a significant earnings penalty for being a naturalized citizen or noncitizen versus an U.S.-born citizen.