An empirical analysis of alternative explanations for the female wage gap

Abstract

The social sciences have four explanations for the gender wage gap: preference, crowding, power, and socialization. Neoclassical economists explain the wage gap as the result of employers and employees' work-related preferences. Crowding theorists argue the wage gap is caused by women crowding into a small number of occupations. Power theorists contend men use their socioeconomic superiority to maintain a two-tier wage system that discriminates against women. Socialization theorists note women's secondary status in the labor markets is a result of lifelong socialization processes. Previous econometric research has mostly overlooked the power explanation. Crowding researchers have also not examined the crowding hypothesis over the entire post-World War II era, choosing instead to focus on one particular year or a few years; this research decision is made even though women were continually increasing their share of the labor force throughout the postwar era. The purpose of this study is to address the two mentioned shortcomings. A wage model is constructed with controls for compensating differentials, power, and female crowding. The model is fitted on male and female workers who were employed in 103 occupations; the 103 occupations were selected because their categorizations have remained consistent between 1950 and 2008. Approximately 30 percent of male workers and 40 percent of female workers are employed in the 103 selected occupations. The robustness of the wage model is tested on ten time-sensitive Census and American Community Survey PUMS. crowding. The model is fitted on male and female workers who were employed in 103 occupations; the 103 occupations were selected because their categorizations have remained consistent between 1950 and 2008. Approximately 30 percent of male workers and 40 percent of female workers are employed in the 103 selected occupations. The robustness of the wage model is tested on ten time-sensitive Census and American Community Survey PUMS. The study finds supporting evidence for the power and crowding explanations. Male workers earn wage premiums when employed in occupations with high degree of collective bargaining whereas women receive wage penalties. Women also receive no premiums in occupations with apprenticeship requirement until 1990, even though their presence in these occupations has not changed between 1950 and 2008. Also, men and women employed in female-crowded occupations receive wage penalties in every surveyed postwar year, but women are more likely to be employed in female-crowded occupations than their male counterparts.