Monday, January 30, 2023
Study Analyzes Why the Gender Pay Gap Has Stalled
Peter Blair and Benjamin Posmanick have published a working paper titled Why Did Gender Wage Convergence in the United States Stall with the Human Capital and Economic Opportunity Global Working Group. The abstract provides:
During the 1980s, the wage gap between white women and white men in the US declined by approximately 1 percentage point per year. In the decades since, the rate of gender wage convergence has stalled to less than one-third of its previous value. An outstanding puzzle in economics is “why did gender wage convergence in the US stall?” Using an event study design that exploits the timing of state and federal family-leave policies, we show that the introduction of the policies can explain 94% of the reduction in the rate of gender wage convergence that is unaccounted for after controlling for changes in observable characteristics of workers. If gender wage convergence had continued at the pre-family leave rate, wage parity between white women and white men would have been achieved as early as 2017.
The article concludes:
[U]sing the introduction of family-leave policies, we explain 94% of the stagnation in gender wage convergence that is unaccounted for after controlling for changes in observable characteristics between men and women. A key lesson from our work is that legally-mandated labor market flexibility can have the unintended effect of stymieing gender wage convergence, notwithstanding the increasing evidence that flexibility which arises endogenously in the labor market through technological innovation, or from firms changing their own policies, can lead to reduced gender wage gaps * * * .
The evidence that we provide on the impact of leave policies on gender wage convergence in the US contributes to a growing literature documenting negative impacts of leave policies on gender wage equality in Europe and other OECD countries * * *. Because the leave offered in the US is less generous that what is offered in peer countries, our results suggests an important role for economists to consider what features of family-leave policy design can soften the equity-efficiency trade-off arising from the introduction of family-leave policies. We leave this work to future studies by other scholars having answered the question: “why did gender wage convergence in the United States stall?”