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Gender Wage Gap: Systemic Explanations & Social Elasticity in the U.S.

Gender Wage Gap: Systemic Explanations & Social Elasticity in the U.S. Elizabeth O’Neill, ECON 539, 6.4.07. Central Questions:. What evidence documents the wage gap between male and female full-time wage earners? How is the wage differential measured through various economic models?

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Gender Wage Gap: Systemic Explanations & Social Elasticity in the U.S.

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  1. Gender Wage Gap:Systemic Explanations & Social Elasticity in the U.S. Elizabeth O’Neill, ECON 539, 6.4.07

  2. Central Questions: • What evidence documents the wage gap between male and female full-time wage earners? • How is the wage differential measured through various economic models? • What are the systemic reasons for the inequitable pay distribution between women and men? Key Sources: • Blau, F., Ferber, M. & Winkler, A. (1998) The Economics of Women, Men & Work, 5th edition. Uppersaddle River: Prentice Hall. • Karamessini, M & Ioakimoglou, E. (2007).Wage Determination & the Gender Pay Gap: A Feminist Political Economy Analysis & Decomposition. Feminist Economics. 13(1): 31-66.

  3. Literature Review Structure • Definition & evidence of gender wage gap • Social elasticity models of measurement • Summarizing reasons leading to the gender wage gap: • Macroeconomic factors • Industry specific trends • Employer-based discrimination • Employee-based causative factors • Brief analysis of literature reviewed

  4. Wage Gap Defined • Examines wage differentials between men & women who are performing similar paid work, with two different assumptions: equal conditions and systemic differences. • Undisputed consensus regarding the gender wage gap but viewed as either persistent discrimination or cohort-based. • Female-to-male earnings ratio ranged from 57% to 81% since WWII.

  5. Social Elasticity • Construction of Wage Differentials • Neoclassical Economic Theory • Human Capital Theory • Occupational Crowding Theory • Determined by % female within occupations • Feminist Marxian Analysis

  6. Macroeconomic Determinants • “Feminization of Labor” • Concentration of low-wage, low-skilled jobs based on expectations of women’s unpaid labor • Reinforces gender differences • U.S. transition from goods to service based economy • *Occupational Segregation • Strong demonstration that female-dominated occupations depress wages for both men and women

  7. Industry-Based Factors • Changes in public sector employment • More women employed in public sector equates to a lessening of the wage gap • Contributing factors are varied occupational distribution, attention to nondiscriminatory recruitment and retention efforts, and higher unionization rate. • Level of unionization • Higher unionization rates improves low-skilled women’s wages • De-unionization depresses men’s wages but not women’s, resulting in a lessening of the gap by proxy

  8. Employer-Based Factors • Starting wage divide • Slight difference at start of career, but exponentially grows • Unequal promotion and compensation rates • Organization size: • Wage gap in small organizations: 29% • Medium: 15% • Large: 17% • Larger: 24% • Differences explained by level of educational returns and access to supervisory positions

  9. Employee-Based Factors • Workforce participation gaps: Women’s wages have increased with delayed marriages and lower fertility rates • Lack of educational investment • early education (HS pro technical, math) • later education (college attainment) • Negotiation skill disparity contributing to inequitable starting wages

  10. Summary of Influential Factors Percentage of wage gap (dependent) = βo + γ1(percent female within occupation) + γ2(educational attainment level) + γ3(continuity of employment) + γ4(on-the-job training access) + γ5(union participation) + γ6(public sector) + γ7(starting wage) + γ8(access to job mobility) + γ9(access to supervisory positions) + γ10(organizational size) + γ11(labor force continuity) + γ12(educational investments)

  11. Analysis of Reviewed Literature • Cohort perspective would take six decades to reconcile the gender wage difference, longer if economic trends influence the current projections. • Persistent discrimination is a complex relationship; researchers largely believe remnants remain. • Measuring the wage differential will need to incorporate demonstrated attenuating variables.

  12. Policy Implications • The most equitable competitive equilibrium will require continued government intervention for both supply and demand sides of labor. • Current national policies address employer-based discrimination; further attention needed for systemic, industry-related, and individual-based causations. Questions?

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