Inter-Industry Wage Differentials and the Gender Wage Gap: An Identification Problem

Abstract

An intuitively appealing method for estimating gender wage gaps by industry is shown to yield estimates that vary according to the arbitrary choice of left-out reference groups for non-industry categorical variables, such as race and marital status. This study uses data from the Current Population Surveys to explore alternative methods for estimating gender wage gaps by industry that are not susceptible to the identification problem. Statistical significance measures reveal when relative industry wage gap rankings are not statistically meaningful. The methodology readily extends to other contexts such as racial, union-non-union, or immigrant-native wage gaps by industry, occupational, or regional groupings.