Statistical Measures of Earnings Differentials

Abstract

Anyone looking at earnings data is immediately struck by the difference inthe average earnings of men and women. Since the principles of our country state that pay should be based on merit and skill factors and that everyone doing the same job should be paid the same wages, explaining the observed wage differences is a high priority social problem. My interest in this topic began when I served as a Visiting Faculty Advisor to OMB and participated in a task force under the direction of the Deputy Assistant Attorney General for Civil Rights. While a substantial literature has been devoted to discovering the factors contributing to high earning power (e.g., education, experience) and measuring (via regression models) their relative importance, it appeared to me that one needed a simple, yet statistically sound measure that would

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