The Gender Gap in Earnings at Career Entry

Abstract

We propose a new approach to analyzing gender differences in wages. This approach identifies several alternative explanatory mechanisms to account for the sorting of women and men into different types of jobs that offer different levels of reward. Because labor market rewards derive from labor market positions, we study matching processes operating at the micro level that sort workers into existing slots in a given macro-level structure of jobs and associated wages. We focus on the explanation of gender differences in wages at career entry. Analyzing data from the National Longitudinal Survey of Youth collected between 1979 and 1991, we find that at career entry women earn 84 cents for every dollar men earn. Gender differences in worker characteristics account for only about 30 percent of this wage gap: Gender differences in occupational aspirations have the most important effect, accounting for 16 percent of the wage gap, and gender differences in job-related skills and credentials account for about 14 percent of the wage gap. Gender differences in adult family roles have little direct effect. Our analysis further suggests that the external influences of employing organizations and network processes on gender differences in occupational and industrial placement at career entry account for another 42 percent of the wage gap. t is well established that in the United States, on average, women's wages are lower than those of men. Data on the 1992 annual earnings of full-time, year-round workers ages 16 and older indicate that, on average, women earned 71 cents for every dollar earned by men (U.S. Bureau of the Census 1993). We analyze gender differences in wages at career entry when market con