Abstract
Our study evaluates and extends existing wage decomposition methodologies that seek to measure the contributions of endowments, pure wage discrimination, and job segregation. We employ data from a regional supermarket that faced a Title VII class-action lawsuit to examine how standard wage specifications integrated with a model of hierarchical segregation might perform in wage decompositions. Our results show that a common misspecification of the wage structure leads to false inferences about the presence of pure wage discrimination. We demonstrate the generalizability of our methodology using CPS data.
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