Working Paper: NBER ID: w28191
Authors: David Neumark; Giannina Vaccaro
Abstract: Several studies find that there is little sex gap in wages at labor market entry, and that the sex gap in wages emerges (and grows) with time in the labor market. This evidence is consistent with (i) there is little or no sex discrimination in wages at labor market entry, and (ii) the emergence of the sex gap in wages with time in the labor market reflects differences between women and men in human capital investment (and other decisions), with women investing less early in their careers. Indeed, some economists explicitly interpret the evidence this way. We show that this interpretation ignores two fundamental implications of the human capital model, and that differences in investment can complicate the interpretation of both the starting sex gap in wages (or absence of a gap), and the differences in “returns” to experience. We then estimate stylized structural models of human capital investment and wage growth to identify the effects of discrimination (or other sources of a starting pay gap) and differences in human capital investment.
Keywords: sex gap; wages; discrimination; human capital investment
JEL Codes: J16; J24; J71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Discrimination (J71) | Wage Growth (J31) |
| Human Capital Investment (J24) | Wage Growth (J31) |
| Human Capital Investment (J24) | Starting Wages (J31) |
| Starting Wages (J31) | Wage Growth (J31) |
| Human Capital Investment Decisions (J24) | Wage Trajectories (J31) |
| Investment in Human Capital (J24) | Wage Penalty for Women (J31) |
| Observed Wage Growth Patterns (J31) | Differences in Human Capital Investment (J24) |
| Gender Wage Disparities (J31) | Human Capital Theory Interpretation (J24) |