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Thus, women may earn less than men both because of their lesser amount of labor market experience and because of the lower returns to experience they obtain the latter reflecting their smaller invest- ments per unit of time.

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Female earnings are further reduced by the depreciation of their stock of human capital during the time they spend out of the labor force. According to this view women wit! Thus, we would expect predominantly female jobs to have relatively flat age-earnings profiles. This implies that labor market discrimination against women could influence their allocation of time between the home and the market and thus the amount and types of their human capital invest- ments. From the standpoint of empirical work this means that analyses which treat such variables as experience and education as ex- ogenous may underestimate the extent of.

Further, women's Tower re- turns to experience may reflect employers' reluctance to provide opportunities for firm- specific training as well as their own vol- untary decisions.


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In the latter case it would also be important to determine whether the employers' decisions are in fact justified by ceteris Paribas sex differences in quit pro- pensities. For the most part empirical research has been focused on the question of whether or not labor market discrimina- tion against women and minorities exists. Choosing among alternative models of dis- crimination and understanding the causes and consequences of employment segrega- tion have received considerably less atten- tion, particularly from economists.

In this section we first consider in some detail the question of whether or not dis-. There is no point in seeking to de- termine the role of segregation in producing discriminatory pay differentials by sex if in fact there is little evidence that such dis- criminatory differentials exist. Second, we explore the existing literature concerning the role of occupational segregation in produc- ing pay differentials and, more briefly, some of what has been learned about the causes of such segregation. Discrimination and Earnings A crude test of the relative merits of the discrimination and human capital explana- tions for sex differences in earnings is pro- vided by an examination of the time series trends in the sex pay differential.

We first briefly consider this time series evidence, then move to a detailed discussion of the more sophisticated cross-sectional analyses ofthe extent of labor market discrimination. As noted in the introduction, there has ac- tually been some deterioration in the rela- tive earnings position of women since the midSOs. It has frequently and incorrectly been assumed that increases in the female labor force participation rate over time are indicative of declines in the average level of experience of women workers due to the impact of new entrants Economic Report of to President, In fact, as Mincer explains, the female labor force grows not only through "widening" increases in the flow of entrants or reentrants but also through "deepening" decreases in the flow of exi- ters.

Ike impact on the average level of experience of female workers depends on the relative magnitude of these two flows. In addition, since labor force entry tends to be selective of female nonparticipants with higher levels of previous labor force expe- rience, and labor force exit tends to be se- lective offemale participants with lower lev- els of previous labor force experience, labor turnover does not dilute average experience levels as much as it might first appear Blau, , Lloyd and Niemi present a variety of evidence indicating that the trend has been for women to remain in the labor force longer and more continuously and that en- trants make up a decreasing proportion of the female labor force.

They conclude that "it appears. Thus, female participation trends do not seem to be re-. BLAU sponsible for the widening pay gap. More- over, they find that "over time, the gap be- tween men's and women's educational attainment has been eliminated and, among young cohorts, it appears that women's pro- pensity to enroll in college is roughly similar to men's" p.

Men and women do con- tinue to differ sharply in fields of speciali- zation, although some progress has recently been made in this area as well Baker, un- dated. Further, one may speculate that the rising divorce rate has increased women s incentives to invest in their labor-market- related human capital.

While one would like better data, partic- ularly on experience, it seems reasonable to conclude that human capital factors do not account for the widening pay gap between men and women. This provides support for the view that discrimination plays a role in producing the differential. It is unlikely that tastes for discrimination against women have increases! However, as we have seen, little decline occurred in the degree of sex segregation in employment during that time.

If increases in the demand for labor in female jobs did not keep pace with increases in the supply offemale labor, relative "crowding" in female jobs may have worsened, exerting a downward pressure on female wages relative to male wages. In- creases in the real wages of women over the period could have continued to induce in- creases in female labor force participation celery Paribas. In addition, it may be argued that women face substantial experience and training re- quirements in their efforts to move into high- level male jobs Freeman, This makes it difficult for equal employment opportu- nity legislation to open the doors to such jobs for older women.

Further, younger women may have had the opportunity to incorporate new expectations of greater la- bor force attachment over their life cycles into their human capital investment deci- sions to a greater extent than have older women. It is true that younger women have been increasing their earnings position rel- ative to younger men. Between and the ratio of the median incomes of full- time, year-round women workers to those of men increased from 59 to 60 percent for all women, but rose from 65 to 70 percent among to year-olds U. Beller this vol- ume also found that younger cohorts ex- perienced greater declines in occupational segregation than clid the work force as a whole.

Thus far, however, the modest gains by younger women do not provide over- whelming support for this view. Much will depend on how this group fares in the next few years. It is also important to point out that if employers were willing to reevaluate their traditional promotion ladders they might find that many older women workers do have the experience necessary for higher-level positions.

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The Measurement of Segregation in the Labor Force | Βιβλία Public

During recent years, while women as a group have ma le little progress in advanc- ing their earnings positions relative to men, black women have advanced relative to white women. Black women's median full-time, year-round incomes have increased from 69 percent of those of white women in to 90 percent in Black men have also gained relative to white men. Their median full-time, year-round incomes rose from 66 percent of those of white men in to 71 percent in Lloyd and Niemi, ; U. They may in part be due to the impact of equal employment opportunity legislation.

The more rapid improvement in the relative in- come position of black women compared with white women than of black men com- parecl with white men may reflect the large number of entry-level positions in many typically female jobs, in comparison with the higher experience and training require- ments in typically male jobs discussed above. The general practice in empirically estimating the mag- nitude of labor market discrimination against a particular group, e.

Discrimination may be measured by the coefficient on a sex dummy variable in an earnings regression equation, in which case the impact of the other explanatory variables on earnings is constrained to be the same for each sex group. More often, this constraint is relaxed by es- timating separate earnings regressions for sex or race-sex groups. In this case the por- tion of the pay differential due to sex clif- ferences in the returns to a given set of char- acteristics i.

There are various problems with this "re- sidual" approach to measuring labor market discrimination. Perhaps the most serious is the specification problem. On the one hand, conventional data sources do not allow for the measurement of all productivity-related characteristics. The absence of actual labor market experience from the data sets uses! Type as opposed to amount of schooling, which varies greatly between men ant! If, on average, males are more favorably en- clowed with the characteristics measured by these omitted variables, the extent of labor market discrimination will be overestimated because of imperfect controls for these omit- ted factors.

On the other hancI, group dif- ferences with respect to some productivity- related characteristics may reflect the indi- rect effects of discrimination Blinder, For example, as discussed earlier, women may be excluded from high-wage occupations be- cause of their sex. Furler, if the endogeneity of choice variables is taken into account, we see that labor market discrimination may dis- courage women's human capital accumulation or alter its type. Measured labor market clis- crimination is likely to be underestimated to the extent that such factors representing other dimensions of discrimination are controlled for.

A related problem is the interpretation of sex differences in the coefficients of earnings regressions. For example, a smaller coeffi- cient on labor force experience for women may reflect their decisions to invest in less on-thejob training than men do, as pro- posed by human capital theorists, or dis- crimination on the part of employers re- sulting in less access to on-thejob training opportunities. These problems of specification and in- terpretation of coefficients reflect a more fundamental problem.

We would like to measure the extent of labor market dis- crimination a demand-side phenomenon.

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But wages are influenced by both sup- ply- and demand-side factors. The earnings functions that are typically estimated are es- sentially reduced-form equations, and thus their coefficients may reflect the influence i5 Further, one may question the basic premise of the human capital model that upward-sloping experi- ence-earnings profiles are indeed due to on-thejob training. No one has yet attempted to specify and esti- mate such a mode! An additional problem with the earnings regression approach is that, while the theory specifies the measurement of discrimination in teas of pay differences that are not ac- counted for by productivity differences, the empirical work involves adjustment using proxies like education and experience for productivity.

Introduction

This gives rise to an errors-in- variable problem Hashimoto and Kochin, ; Roberts, For simplicity, let us assume that the productivity proxies are measured so that they are positively related to earnings. Unfortunately, however, there is no ob- vious solution to this problem. Roberts suggests a procedure that he terms "reverse regression," in which the independent var- iable e. Such a procedure will pro- duce unbiased coefficients only if the de- pendent variable is measured without error. But earnings as measured are only an im- perfect indicator of permanent earnings ca- pacity, which, one might argue, is the the- oretically relevant variable Hashimoto and Kochin, Moreover, measured earn- ings are only a proxy for the total rewards for the job, including fringes and the non- pecuniary benefits of the work Madden, Another classical approach to the errors-in-variable problem involves the use of instrumental variables.

However, the specification of the appropriate instruments is difficult given the current state of theory and the availability of data Kamalich and Polachek, An additional problem in using conven- tionally estimated earnings regressions to measure discrimination most likely pro- duces biases in the opposite direction, that is, leads us to underestimate discrimination.

Regressions are generally estimated on the selected sample of labor force participants.

INTRODUCTION

But Gronau has argued that it is the wage offers, not the actual wages of males and females, that should be compared. The distribution of actual wages represents only that part of the offer distribution that is ac- ceptable to job seekers. He provides empirical evidence in support of this con- tention.

The Labor Force Participation Rate (LFPR)