Ebook The Narrowing of the U.S. Gender Earnings Gap, 1969-1999: A Cohort-Based Analysis
After several decades of remarkable stability, the U.S. gender wage gap began to narrow substantially after about 1980 (e.g. Blau and Kahn 2000). A well known explanation of this fact is based on changes in women’s labor market experience (e.g. Goldin 1989; O’Neill and Polachek 1993). Simply put, this “experience” hypothesis argues that because earlier generations of women experienced more frequent labor market interruptions, their earnings tended to fall behind the earnings of men in their cohort as they aged. According to this hypothesis, this rate of “falling behind” should be less severe among later generations of women, who accumulate experience at almost the same rate as their male counterparts.
While some studies do present descriptive statistics that allow cohorts to be followed over time (e.g. O’Neill and Polachek 1993, Table 2; Blau and Kahn 2000, Table 1), existing analyses of the recent rise in women’s relative earnings have concentrated most of their attention on the earnings premium associated with (actual or potential) experience across a series of cross section regressions. Most recently, O’Neill (2003) has shown dramatic evidence of changes in the slope of this cross-sectional relationship. At the same time, direct and detailed examination of the within-cohort relative wage growth experience of women, especially since the 1980’s “takeoff” of women’s relative earnings, has been surprisingly rare.
The goal of this paper is to improve our understanding of the recent decline in the U.S. gender wage gap by characterizing changes across cohorts in the rate of age-related earnings growth among men and women. Broad historical changes are analysed using the 1970 through 2000 censuses. Complementing this, we examine gender differences in earnings growth in a large panel of college educated workers covering the period 1989-1999. If the career interruptions emphasized by the “experience” hypothesis are important anywhere in the labor market, it is in this highly-educated sample where we have the greatest expectation of observing their effect. Our panel data also have the unique advantage of allowing us to follow older women over time while controlling for college major. This allows us (a) to assess the implications for estimated earnings growth of selection effects stemming from women’s labor force entry and exit over time, and (b) to sort out the effects of between-cohort changes in pre-labor market investments such as college majors.
Our main results are as follows. First, contrary to what one would gather by looking at repeated cross sections, and in contrast to Wood et al.’s (1993) findings for lawyers, we find that over the past three decades the gender earnings disadvantage associated with a given cohort of workers tends (with one qualification, noted below) to be fairly constant if that cohort is followed over time. This stylized fact holds both in the representative 1969-1999 Census data, and in our college-educated panel between 1989 and 1999 where controls for college major are available. Second, we find that younger cohorts of women face a smaller disadvantage, relative to men, than did older cohorts of women at the same age. Thus, the recent narrowing in the gender wage gap seems to be driven entirely by a decline in the gap across cohorts; there is little evidence that, in any generation in our data, American women began their careers with similar earnings to men and then fell behind as they aged.
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