On Decomposing Changes in Male- Female Wage Gap

Sang-Hyop Lee

No 200012, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: Several researchers have used trend decomposition techniques to decompose the change in the wage gap between two groups. In contrast to the previous decomposition techniques which are flawed on both conceptual and technical grounds, this paper provides alternative decomposition methods which have clearer interpretations. The alternative decomposition is then applied to the May CPS from 1983 and 1993. The results from the empirical application in this two-period model show that the previous decomposition methods yield substantially lower estimates of the portion due to changes in characteristics, and therefore higher estimates of the portion due to changes in coefficients. This implies the conclusions drawn from previous methods might overstate the change in the wage gap attributable to decline in discrimination.

Pages: 22 pages
Date: 2000
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http://www.economics.hawaii.edu/research/workingpapers/012.pdf First version, 2000 (application/pdf)

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