The Structure of the Female/Male Wage Differential: is it Who You Are, What You Do, or Where You Work?

This paper decomposes the observed wage difference between male and female workers into the portions associated with three types of segregation and with the individual’s sex. The contribution of each type of segregation is the product of two factors: the extent of segregation and the wage penalty (estimated coefficient) associated with working in a female-dominated constituent. In five Bureau of Labor Statistics Industry Wage Surveys, the earnings of men and women in the same occupation at the same establishment differ by only 1%. Much of the difference in pay between men and women is associated with segregation by occupation (this reduces women’s wages by 11% to 28%). But segregation by establishment and work group also lowers the wages of women by a total of 12%. Comparisons are also made between the union and nonunion sectors of two industries. Union establishments are characterized by less variation based on occupational and individual wage penalties, but more variation based on establishment segregation.