Sector employment, wage gaps, and sector wage gap differentials in the labor market for doctorates

Yoon-Tien Yap

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: This thesis consists of two chapters. These chapters are presented as separate journal articles, although both chapters deal with doctorates in the labor market. Chapter I examines the supply and demand motivations of agents in a labor market for Ph.D.s that is segmented by sector. Labor is heterogeneous across sectors in that individuals with the same skills may earn different wages in different sectors. This can be attributed to sector differences in the organizational structure of work, and differences in the pricing of sector-specific output. Sector employers maximize profits by offering a prospective employee a wage equal to the employee's estimated value of marginal product in that sector. Prospective employees select employment in the sector that yields the highest degree of utility in employment. Employees maximize utility based on personal tastes (that are inherently identified by demographic characteristics) and on the wages offered to them by employers in different sectors. Wage offers are assumed to be determined independent of employees' supply decisions (i.e. they are exogenous in the utility maximization problem).;Chapter 2 presents an analysis of wage differences across gender and race categories. It performs wage gap decompositions that determine the portions of the wage gap attributed to differences in the stock of human capital and differences in employer valuation of gender- and race-specific human capital. Moreover, Chapter 2 examines sector differences in these wage gaps. It decomposes sector wage gap differentials into observed and unobserved human capital and price effects. The observed human capital effect (also known as the observed X effect) evaluates sector differences in the relative human capital stocks of gender and race categories. The observed price effect calculates the contribution of sector differences in the valuation of male human capital to the sector wage gap differentials. The unobserved human capital, or gap effect, calculates the contribution of sector differences in the residual wage position of females in the male distribution to the sector wage gap differentials. The unobserved price effect calculates the contribution of sector differences in male residual wage dispersion to the sector wage gap differentials.

Date: 2000-01-01
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