The Career Evolution of the Sex Gap in Wages: Discrimination Versus Human Capital Investment

David Neumark and Giannina Vaccaro

A chapter in 50th Celebratory Volume, 2023, vol. 50, pp 117-150 from Emerald Group Publishing Limited

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: Gender gap; discrimination; human capital investment; starting pay; wage growth; returns to experience; J24; J71 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:rleczz:s0147-912120230000050004

DOI: 10.1108/S0147-912120230000050004

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