Explaining Occupational Sex Segregation and Wages: Findings from a Model with Fixed Effects

TLDR

Occupational sex segregation and wage gaps have been attributed to human‑capital advantages for women, compensating differentials for men, or discrimination against women, but the relative importance of these mechanisms remains unclear. The study aims to determine which theoretical explanation best accounts for occupational sex segregation and wage disparities by applying a fixed‑effects model to National Longitudinal Survey data. The authors use a fixed‑effects model on a pooled cross‑section time‑series of the National Longitudinal Survey to correct for selection bias and predict earnings of young men and women. The analysis finds little support for human‑capital or compensating‑differential explanations, but shows evidence of pay discrimination against both men and women in predominantly female occupations. Authors: not specified.

Abstract

Does segregation arise because occupations have financial advantages for women planning to spend some time as homemakers as human-capital theorists claim? Do male occupations have more onerous working conditions that explain their higher earnings as the neoclassical notion of compensating differentials suggests? Or do female occupations have low wages that are depressed by the sort of discrimination at issue in comparable worth as sociologists have argued? To answer these questions the authors use a model with fixed effects to predict the earnings of young men and women from a pooled cross-section time-series of the National Longitudinal Survey. Analyses are undertaken for both blacks and whites. A fixed-effects model is useful for answering these questions because it corrects for the selection bias that results from the tendency of persons who differ on stable characteristics that are unmeasured but affect earnings to select themselves into different occupations. The authors find little evidence that female occupations provide either low penalties for intermittent employment at high starting wages the advantages human capital theorists have argued them to have. Rather there is evidence of pay discrimination against men and women in predominantly female occupations. Implications for economic and sociological theories of labor markets are discussed. (authors)