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Mengyuan Liang

Mengyuan Liang.

Even though women have continuously caught up with men in education attainment and labor market participation since the 1970s, the wage gap between men and women still universally exists today. Do female college graduates still earn less than their male counterparts if men’s and women’s “profiles” of observed productivity-related characteristics are statistically adjusted to be equivalent? To answer this research question and better understand the current gender wage gap, I introduce a novel propensity score stratification method for gender wage gap decomposition. This new method overcomes certain limitations of the traditional Blinder-Oaxaca decomposition method, and provides an example of validly applying propensity score-based methods (mostly used in causal settings) to gender wage gap decomposition, a non-causal setting. Making use of this new method, I analyze a nationally representative sample from the Baccalaureate and Beyond Longitudinal Study, which represents the 1993 Cohort of U.S. college graduates. Through propensity score stratification, the observed productivity-related characteristics between men and women in the sample are statistically adjusted to be equivalent within each stratum of propensity score. After “equalizing” these characteristics, evidence shows the women-to-men wage ratio among this college educated population is still 87.4% at the tenth year after they graduated from college. This remaining gender gap cannot be explained by the observed gender differences in productivity-related characteristics, and is the evidence of a discriminatory wage gap possibly existing in the labor market. Additionally, the unexplained gender wage gap universally exists regardless whether these “profiles” of qualifications and labor market experience are stereotypically female or male. Even acknowledging that this research cannot account for all the gender differences in productivity due to data limitation, the results of this research will add to the empirical evidence of measuring the discriminatory wage gap that possibly exists in the labor market.

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