The structure of female wages

Abstract

While most people would agree that familial responsibilities affect women's labor market behavior and wages, surprisingly little is known about how this process operates. Past investigations of women's wages have generally relied on data sets designed for other purposes, and, as a result, theoretically important determinants of women's wages may be measured imprecisely or omitted entirely from analyses. Familial responsibilities influence women's labor market behavior in at least two distinct ways. First, many women will withdraw entirely from labor market activities to bear and/or raise children. Not only does this reduce the total amounts of work experience and job tenure women acquire, but Jacob Mincer and Solomon Polachek further argue that women's human capital (work skills) will depreciate during such withdrawals and that such withdrawals will affect the timing of women's investments in on-the-job training. Second, women who choose to work may adjust their labor market activities to meet family responsibilities in ways which reduce productivity and hence wages. For instance, women with home responsibilities might restrict job locations or schedules, or might take off extra time from work to care for sick children. The 1976 Panel Study of Income Dynamics (PSID) is well suited for exploring female wages. The PSID is a longitudinal study of 5,000 families which began in 1968. In 1976, male heads of household, female heads of household, and wives were asked to provide detailed information on earnings, education, work history, absenteeism, and self-imposed restrictions on job hours and job location. These data are used to describe women's patterns of work history and labor force attachment, to specify the determinants of women's wages, and to investigate the wage gaps between white men and each group of women.

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