The Closing Gender Gap as a Roy Model Illusion (with Yona Rubinstein)
Under the assumption that earning power (sufficiently) increases female labor supply, we show how rising wage inequality within-gender since 1975 has created the illusion of rising wage equality between genders. It is well known that an upward sloping labor supply curve leads the wages of working women to overstate the wages of all women, because the low wage women are selected out of the market. Less appreciated is the fact that the selection bias may get worse as inequality grows, which is exactly what happened since 1975. Control function methods have important advantage in this case, and we use them to show how the earning power of the median woman has not caught up to the earning power of a median man, even while the earning power of the median working woman has.
This paper has been updated since the NBER wp version. Click here to send email to me requesting an Acrobat copy of the paper.
The request should include your email address and institutional
© copyright 2004, 2005 by Casey B. Mulligan and Yona Rubinstein.