Technological Change and Gender Wage Differentials

Simona Tick () and Ronald Oaxaca
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Simona Tick: Department of Economics, University of Mississippi

LoWER Working Papers from AIAS, Amsterdam Institute for Advanced Labour Studies

Abstract: This paper investigates the impact of non-neutral technological change on the recent narrowing of the gender wage differentials. The relation between technological change and relative wages of female and male workers is modeled through a constant elasticity of substitution production function that incorporates male and female labor inputs by occupation in each industry, a non-labor input and a productivity parameter function that captures non-neutral technological change. Data from 1979 to 2001 on employment and wages by industry and occupation come from the Current Population Survey. Using non-linear two stage least squares with cross-equation restrictions, the estimated results provide evidence that non-neutral technological change partially explains the documented narrowing of the gender wage gap during the 1980s and 1990s, even after controlling for unexplained differences in gender relative wages. Specifically, changes in non-neutral technological change explain between 5 % and 9 % of the overall increase of women’s wages relative to men’s in the sample. The strongest effect is found for the highest pay occupation level, while the smallest effect is found for the lower pay occupations. Finally, this paper brings evidence that ignoring the unexplained component of the gender wage differentials could result in a biased estimation of the effect on non-neutral technological change on the gender wage gap.

Date: 2005-07
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