Francine D. Blau

International Differences in Male Wage Inequality: Institutions Versus Market Forces

This paper studies the considerably higher level of wage inequality in the United States than in nine other OECD countries. We find that the greater overall U.S. wage dispersion primarily reflects substantially more compression at the bottom of the wage distribution in the other countries. While differences in the distribution of measured characteristics help to explain some aspects of the international differences, higher U.S. prices (i.e., rewards to skills and rents) are an important factor. Labor market institutions, chiefly the relatively decentralized wage-setting mechanisms in the United States, provide the most persuasive explanation for these patterns.

Wage Structure and Gender Earnings Differentials: an International Comparison

Using microdata to analyze the gender pay gap in ten industrialized nations, the authors focus on the role of wage structure--the prices of labor market skills in influencing the gender gap. They find wage structure enormously important in explaining why the U.S. gender gap is higher than that in most other countries. The authors conclude that the U.S. gap would be similar to that in Sweden and Australia (the countries with the smallest gaps) if the United States had their levels of wage inequality. This finding reflects the larger penalty in the United States for those with low skill levels or employed in low-wage sectors. Copyright 1996 by The London School of Economics and Political Science.

The U.S. Gender Pay Gap in the 1990s: Slowing Convergence

Using Michigan Panel Study of Income Dynamics (PSID) data, the authors study the slowdown in the convergence of female and male wages in the 1990s compared to the 1980s. They find that changes in human capital did not contribute to the slowdown, since womens relative human capital improved comparably in the two decades. Occupational upgrading and deunionization had a larger positive effect on womens relative wages in the 1980s than in the 1990s, explaining part of the slower 1990s convergence. However, the largest factor was a much faster reduction of the “unexplained” gender wage gap in the 1980s than in the 1990s. The evidence suggests that changes in labor force selectivity, changes in gender differences in unmeasured characteristics and in labor market discrimination, and changes in the favorableness of demand shifts each may have contributed to the slowing convergence of the unexplained gender pay gap.

Maternal Labor Supply and Children's Cognitive Development

This paper analyzes the relationship between maternal labor supply and childrens cognitive development, using a sample of three- and four-year-old children of female respondents from the 1986 National Longitudinal Surveys Youth Cohort (NLSY). Respondents in the NLSY were aged 21 to 29 in 1986; thus our sample consists of children of relatively young mothers. We show that for this group the impact of maternal labor supply depends upon when it occurs. Maternal employment is found to have a negative impact when it occurs during the first year of the childs life and a potentially offsetting positive effect when it occurs during the second and subsequent years. We find some evidence that boys are more sensitive to maternal labor supply than girls though the gender difference is not significant. The negative first-year effect is not mitigated to any great extent by the increased maternal income that accompanies it, though the increase in maternal income does appears to play an important role in producing the positive effect in the second and later years.

Race and Sex Differences in Quits by Young Workers

This study uses data from the National Longitudinal Surveys of young men and women to analyze race and sex differences in the probability and consequences of quitting. The authors find that overall quit rates in this group are higher for women than for men and about the same for blacks and whites. When several personal and job characteristics are held constant, however, the quit rates of young men and women are about the same and young blacks actually quit less frequently than young whites. When an instrumental variable approach is used to account for sample heterogeneity, it is found that, for all race and sex groups, quitting improved both current wages and long-term earnings prospects. Further, the improvement in long-term earnings prospects is found to be greater than the gain in current earnings, suggesting that training opportunities are an important consideration in the job shifts of all young people.

Trends in Earnings Differentials by Gender, 1971–1981:

Using data from the Current Population Surveys, the authors examine earnings differentials by gender for 1971 and 1981. Most observers, focusing on the median annual earnings of year-round, full-time workers, have concluded that the earnings differential did not change over that decade. Using a different method to adjust for gender differences in hours and weeks worked, the authors find, on the contrary, that the female-male earnings ratio significantly increased during the 1970s. The results suggest that declining gender role specialization and declining discrimination (as conventionally measured) contributed to the observed trend. Two factors that worked in the opposite direction, though to smaller effect, were declines in womens relative returns to education and to employment in male jobs and integrated jobs.

Institutions and laws in the labor market

This chapter examines the impact of wage-setting institutions and government policies on wages and employment, focusing on the OECD countries. There is considerable evidence that centralized collective bargaining, minimum wages and antidiscrimination policies raise the relative wages of the low paid. Evidence of the impact of these institutions and other policies such as mandated severance pay, advance notice or unemployment insurance is more mixed with some studies finding negative employment effects while others do not. This may reflect the adoption by many OECD countries of off-setting policies, such as public employment, temporary employment contracts and active labor market programs, which, while they may have reduced the adverse relative employment effects of their less flexible labor market institutions on the low skilled, appear not to have prevented high overall unemployment.

Do Cognitive Test Scores Explain Higher U.S. Wage Inequality

Using microdata from the 19941998 International Adult Literacy Survey for nine countries, we examine the role of cognitive skills in explaining higher wage inequality in the United States. We find that while the greater dispersion of cognitive test scores in the United States plays a part in explaining higher U.S. wage inequality, higher labor market prices (i.e., higher returns to measured human capital and cognitive performance) and greater residual inequality still play important roles, and are, on average, quantitatively considerably more important than differences in the distribution of test scores in explaining higher U.S. wage inequality.

The Use of Transfer Payments by Immigrants

This paper uses data from the 1976 Survey of Income and Education to compare the receipt of transfers by families headed by male and female immigrants and those headed by native-born Americans. The average level of transfers is found to be considerably higher among families headed by immigrants, but this is almost entirely the result of the higher average age of family members among the immigrant group — a reflection of the large inflows of immigrants into the U.S. during the pre-1924 period. When age and other factors are held constant, immigrant families are found to be considerably less likely to rely on welfare than native families, and their receipts from social insurance programs are found to be only slightly higher.

Black-White Earnings over the 1970s and 1980s: Gender Differences in Trends

This paper uses CPS data to analyze gender differences in black-white annual earnings trends over the 1970s and 1980s. We find that in at least two respects black women fared better than men over this period. First, due to decreasing relative annual time inputs for black males, but not black females, black women experienced increases in both annual earnings and estimated wages compared to white women, while black men gained only in terms of wages compared to white men. Second, since the gender earnings gap among whites was narrowing during this time, as black womens wages rose relative to white womens, they also made faster progress relative to white males than did black males. In other important respects, however, the experience of black men and women over the period was similar. First, for both groups, while earnings and wages relative to whites of the same sex rose during the 1970s, they stagnated or declined during the 1980s. Second, in contrast to the 1960s, younger blacks did not fare better than older blacks during the 1970s and 1980s. While in 1971, both unadjusted wage ratios and adjusted earnings ratios were highest within each sex group for labor market entrants, by 1988 these ratios were fairly similar across experience groups.