Earnings Gap Research Articles

Minimum wage policy and the racial earnings gap

Economic Inequality The earnings gap between white and Black workers in the United States fell substantially only once over the past 70 years. Derenoncourt and Montialoux show how this change was driven in large part by the 1967 extension of the federal minimum wage to sectors that employed about 20% of the total U.S. workforce but nearly a third of Black workers, including agriculture, hotels, and schools. This policy extension can explain more than 20% of the decline in the racial earnings gap between 1965 and 1980 and did not have large adverse employment effects on either Black or white workers. The gap between the average wage in the treated industries and the rest of the economy fell, as did the gap between Black and white workers within the treated industries. Q. J. Econ. 10.1093/qje/qjaa031 (2020).

The declining earnings gap between young women and men in the United States, 1979–2018

We examine the dynamics of the gender earnings gap over the 1979 to 2018 period among full-time workers aged 25–29, focusing on the role of marital status and the presence of children. Using data from multiple years of the Current Population Survey, we find that the earnings gap declined among all groups of men and women, and by 2018 there was earnings parity among the those who were not married and without children. The share of people in this group also grew over the period, and comprised a majority of both men and women by 2018. We also find that while marriage was associated with lower earnings among women in 1979, by 2018 it was associated with higher earnings, suggesting greater positive selection of women with high earnings potential into marriage. The positive association between marriage and earnings among men remained stable. While we found a persistent earnings penalty for having children among women over the period, we found an emerging dampening effect of having children over time among men, which suggests that greater participation in childcare among men has led to lower earnings than in the past (i.e., a causal connection) and/or an emerging selection effect of young men more interested in childrearing over time, perhaps reflecting a cultural shift.

The resettlement of Vietnamese refugees across Canada over three decades

ABSTRACT Welcoming 60,000 Southeast Asian refugees in the 1979–80 period has become a celebrated part of Canada's history, but the eventual integration of these refugees into Canadian society has received insufficient attention. This study provides a comprehensive overview of Vietnamese refugees’ economic outcomes over the three decades after their arrival. This study also explores how regional contexts contributed to shaping economic outcomes. Based on analyses of multi-year census data, this study finds that adult Vietnamese refugees arrived with little human capital, but they had high employment rates, and over time they closed their initial large earnings gap with other immigrants. Childhood Vietnamese refugees out-performed other childhood immigrants and similar-aged Canadian-born individuals in educational attainment and earnings when they reached adulthood. The geographic region of residence was associated with some large variations in refugees’ socioeconomic outcomes; and regional differences in refugees’ human capital characteristics, ethnic enclave, and economic conditions played varying roles depending on the outcome measure and length of residence.

Is There a Male-Breadwinner Norm? The Hazards of Inferring Preferences from Marriage Market Outcomes.

This paper argues that distributions of spousal earnings gaps provide no identifying information for the male breadwinner norm, nor such a norm's consequences for gender inequality. First, we show that simple marital matching models-without norm-related assumptions-closely replicate U.S. distributions of wife-husband earnings gaps. Second, we show that the discontinuity in this distribution as wives start to out-earn husbands reflects not breadwinner norms, but rather a point mass of equal-earning couples. We conclude by arguing that the point mass may also threaten other tests of the male breadwinner hypothesis, and proposing several robustness checks that future research should utilize.

Explaining Cross-National Variation in the Health Benefits of Tertiary Education: What Are the Roles of the Skills Gap and the Earnings Gap?

Abstract Recent studies have shown that the relationship between educational attainment and health varies across countries. To better understand the cross-national variation in the health benefits of higher education, we theorize and empirically examine two country-level factors—the skills gap and the earnings gap between adults with tertiary and intermediate education. We expect the skills gap and the earnings gap to moderate educational gradients in health through shaping information transparency and thus affecting labour market and marriage market opportunities, even though men and women may be affected in distinct ways. To test our hypotheses, we analyse a sample of 75,642 women and 68,004 men in 25 countries from the Programme for the International Assessment of Adult Competencies data. Multilevel linear regression models show that, for women but not men, the relationship between tertiary education and self-reported health is magnified in countries with a greater skills gap; for men but not women, the relationship between tertiary education and self-reported health is magnified in countries with a greater earnings gap. Combined, these results indicate that the educational system, the labour market, and the partner selection process cross-cut and amplify one another to shape the (re)production of health inequalities in gendered ways.

Replication: Do women shy away from competition? Experimental evidence from China

Abstract We investigate gender differences in competitiveness using a lab-in-the-field experiment and a subject pool consisting of Chinese adults following the design by Niederle and Vesterlund (2007). China provides an interesting environment to study since the country has promoted gender equality for a long time and the gender gap in earnings is small in cross-country comparisons. However, in many respects, China is still a patriarchal society. Our results show that women perform equally well as men in a piece-rate task and significantly better in a competitive payment environment. Despite this, men are more than twice as likely to choose a competitive environment. This gender difference cannot be explained by differences in confidence or risk preferences.

Legitimate earnings inequality and national welfare commitment: Correspondence between economic institutions and the pay 80,000+ people in 30 nations think legitimate for ordinary jobs and for elite jobs

In formulating views of just reward for high-status and low-status work, do ordinary citizens take cues from their nation's public stance on income inequality as institutionally embedded in their welfare state, i.e. their social welfare and labor market policies, their "welfarism"? How large a morally correct earnings gap flows from that? Our multilevel analyses (fixed effects, random intercepts) replicate prior research on the impact of individual characteristics and socioeconomic development. They open new territory with the discovery that public opinion on legitimate/just earnings of high-status occupations aligns moderately strongly with welfarism, ceteris paribus, with welfare state citizens advocating lower pay for the elite but not higher pay for working-class occupations: The welfare state is not (or no longer) a matter of helping the poor but instead of bringing down the elite, "cutting down the tall poppies". Data: World Inequality Study v2.1: 30 countries, 71 surveys, and over 88,000 individuals.

Gender differences in Russia's job mobility and its rewards*

AbstractThis article considers age and gender differences in the probability and consequences of job mobility in Russia. Little is known about who is mobile and whether mobility impacts wages once the characteristics of movers are controlled for. Results show a gender difference in the likelihood of exit but not promotion. Results also show that promotions have a positive effect only on the wages of young women, but young men's wages are not affected. Further, young men see a significant decrease in wages following an exit, while young women are not affected by firm exit. The article shows that early mobility is particularly important for women, who earn less overall. Results help to understand processes of inequality in wages and conditions that occur due to sorting, and the importance of promotions as ‘life chances’ which lead to ‘career‐track jobs’. Gender differences in securing such life chances may help to understand gaps in earnings, which emerge later.

Gender, Job Satisfaction and Quits: A Generational Comparison

Job satisfaction has a significant and negative impact on voluntary job quits that may vary in size by gender. If women are more likely than men to quit dissatisfying jobs and therefore interrupt their careers, then gender gaps in earnings, labor force participation and leadership roles may persist. However, the improvement of these gender gaps over time may reflect a convergence between genders in how job satisfaction affects quit decisions. Using panel data comprised of two cohorts of similarly aged workers in the US, women’s quit behavior in the past was significantly more responsive to job satisfaction than men’s quit behavior. Yet, this gender difference vanished over time. Fixed effects estimations and robustness checks confirm these results.

Poverty and labor informality in Colombia

Abstract Labor informality and poverty are at high levels in Latin America. In developing countries, poverty and the labor market are related not through unemployment but through employment. The purpose of this paper is to analyze the link between labor informality and poverty in Colombia. To do so, earnings gaps associated with labor informality are estimated; then, the effect of formalization on poverty is calculated, as the influence of changes in labor informality on Colombia’s poverty reduction from 2002 to 2013. The findings show that the earnings gap between formal and informal workers is 37–44%, and if informality were eliminated, poverty would decrease by approximately 40%. However, even though informality has great potential to reduce poverty, its actual effect on Colombia’s poverty reduction in the years analyzed was low.

Inequality Consequences of the COVID-19 Recession

The COVID-19 pandemic and the resulting lockdown policies have disproportionately affected workers at the bottom of the income distribution, thus widening the earnings gap between the top and the bottom percentiles of workers. In this paper, we examine how changes in the labor market due to the COVID-19 recession affect earnings inequality in the US and contrast the effect of COVID-19 recession with previous recessions identified since 1988. Using monthly earnings data from the Current Population Survey, we find a precipitous increase in inequality as measured by the 10/90 ratio of earnings in April 2020. The increase in earnings inequality can be attributed to the widening of the gap in earnings in the bottom of the earnings distribution. Compared to the Great Recession, that saw a comparable increase in earnings inequality, the underlying causes of changes in inequality differ significantly. Most job losses in the COVID-19 recession are concentrated among low earning industries in the services sector, while job losses during the Great Recession were more uniformly distributed across the earnings distribution. The results of the present study provide key guidelines for the design of redistribution policies in the post pandemic recovery.

Gender role attitudes and male-female income differences in China

By investigating deep-rooted cultural norms, this paper explores whether and how traditional gender role attitudes impact income gaps between men and women and identifies causal effects via instrumental variable and other causal inference methods. Based on data from the Chinese General Social Survey in 2013, the results show that traditional gender role attitudes have a strong negative effect to the earnings of women but have no significant effect on men’s incomes. Through Oaxaca-Blinder decomposition, this research finds that the different effects of gender role attitudes on the incomes of men and women appear to play a prominent role in causing the gender gap in earnings. In addition, gender role attitudes have an indirect and broad effect on gender income inequality through educational attainment, labor force participation, working hours, and occupational status. These results provide us with a new perspective for understanding the persistence and mechanisms of gender income stratification under educational equalization and have implications for gender equality policies.

Human capital accumulation: Evidence from immigrants in low-income countries

This paper offers new evidence on the theory of human capital accumulation. The current findings in developed countries have documented that immigrants' earnings growth exceeds that of natives and that immigrants upgrade their occupations over time. Three possible explanations for these observations are suggested in the literature: 1) immigrants accumulate more human capital than natives, 2) immigrants are not able to fully transfer their skills, so over time, they restore the value of source-country human capital, and 3) immigrants are more productive than natives because they are positively selected on ability. This study investigates the labor market outcomes of immigrants in low-income countries and finds that immigrants earn more than comparable natives and work in better-paid occupations. Over time the gap in earnings and occupational distribution between immigrants and natives narrows. This observation is more consistent with the predictions of human capital accumulation theory than with skill transferability and selection theories.

Decomposing Income Inequality in the United States, 1962-2018

Income inequality in the United States has been on the rise. To understand why, we use several complementary techniques to decompose total income inequality into components attributable to five personal traits: sex, race, education, occupation, and industry of work. By examining how income differences along these traits add to net inequality, and how their contributions have changed over time, we vet competing hypothesis for the growing earnings gap. Our findings suggest that changes in human capital accumulation, in particular, the returns to education, drove much of the recently observed changes.

Gender earnings gap among the youth in Malawi

AbstractWhile young women's engagement in economic activities is an essential component of development, gender gaps are still commonly observed worldwide and especially in developing countries like Malawi. This study introduces recent data to provide new evidence for a sub‐Saharan country that has yet been closely examined. Using the International Labour Organization's School‐to‐Work Transition Survey (ILO SWTS) individual‐level data, I examine the gender earnings gap among the youth in Malawi by conducting Mincer earnings regressions with Heckman selection correction and applying Blinder–Oaxaca decomposition methods. I find that young women in Malawi earn significantly less than young men and that women are significantly less likely to engage in income‐generating work activities. Also, substantial unadjusted gender earnings difference in Malawi is overwhelmingly due to differences in returns. Moreover, detailed decomposition results show that gender differences in work‐related individual characteristics and firm characteristics also contribute to the gender earnings gap. The results suggest that any effort to reduce the gender earnings gap should involve improved access to education as well as better workplaces for women.

Assessment of pharmacist gender bias: Egalitarianism of the Department of Veterans Affairs

For the past 2 decades, the earnings gap between genders has narrowed for pharmacists, making it 1 of the smallest for a high-wage profession. Gender bias is reflected in 2 main areas, pay and opportunity. The Department of Veterans Affairs (VA) is the largest integrated health care system in the country, and the authors performed an analysis to see if there was any evidence of gender bias within its pharmacist workforce. The distribution of pharmacists by gender, age, and years of service was examined and whether part-time employment had any impact was also studied. Overall, there is a high degree of gender egalitarianism in terms of pay and opportunity for pharmacists at the VA. The level of step achievement, and thus, pay for men and women, was not associated with gender but rather years of service.

Earnings and gender wage gap in Lebanon: the role of the human and social capital

ABSTRACT This paper investigates the earning function and the gender wage gap in Lebanon using human and social capital covariates. The study uses a randomly collected sample from the Lebanese working population in the greater Beirut area applying the counterfactual decomposition and the generalized quantile regressions. Most of the results support previous research which concludes that the human and social capital indicators have a significant impact on earnings and that the wage gap is mainly due to structural effect. Moreover, the results show evidence of quicksand and glass ceiling effects that limit female income.

Do Apprenticeships Pay? Evidence for England

AbstractThe importance of apprenticeships for early labour market transitions varies across countries and over time. In recent times, there has been a policy drive to increase the number of people undertaking apprenticeships in England. This is regarded as important for addressing poor productivity. We investigate whether there is a positive return to undertaking an apprenticeship for young people. We use detailed administrative data to track recent cohorts of young school leavers as they transition to the labour market. Our results suggest that apprenticeships lead to a positive average earnings return (at least in the short run), although there is stark variation between sectors. This is an important driver of the gender gap in earnings.

Private Pensions and the Gender Distribution of Fiscal Welfare

The provision of taxation relief to support pension savings has become a large and expensive aspect of the welfare state in many countries. Among OECD member states this exceeds $200 billion in revenue forgone each year. Previous research has consistently found this fiscal welfare to have pronounced regressive distributive outcomes. However, little is known about the gendered impact of these fiscal welfare supports, a void this article addresses. Using data for Ireland the article finds that the current structure of fiscal welfare supports notably favours males over females. Nominal contribution levels are higher among males, and males are more likely to be active contributors to pension savings. The associated tax supports are consequently skewed, with two-thirds received by men and one-third by women. This outcome suggests a continuation of the gender earnings gap into retirement and a discontinuity between longevity expectations and tax policy supports for pension provision.

Structural racism, economic opportunity and racial health disparities: Evidence from U.S. counties.

In this study, we introduce the ‘racial opportunity gap’ as a place-based measure of structural racism for use in population health research. We first detail constructing the opportunity gap using race-sex specific estimates of intergenerational economic mobility outcomes for a recent cohort. We then illustrate its utility in examining spatial variation in the racial mortality gap. First we demonstrate a correlation between the racial opportunity gap and the racial mortality gap across U.S. counties; where the gap in the adult earnings of black and white children born to families at the same income level is greater so, too, is the gap in mortality. Second, we show in a multivariable framework that the racial opportunity gap is associated with the racial mortality gap net of differences in the socioeconomic composition of the two groups. In so doing, we aim to provide population health researchers with a new empirical tool and analytic framework for examining the role of structural racism in generating racial health disparities.