June 2006

IZA DP No. 2176: The U.S. Gender Pay Gap in the 1990s: Slowing Convergence

published in: Industrial and Labor Relations Review, 2006, 60 (1), 45-66

Using Michigan Panel Study of Income Dynamics (PSID) data, we study the slowdown in the convergence of female and male wages in the 1990s compared to the 1980s. We find that changes in human capital did not contribute to the slowdown, since women’s relative human capital improved comparably in the two decades. Occupational upgrading and deunionization had a larger positive effect on women’s relative wages in the 1980s, explaining a portion of the slower 1990s convergence. However, the largest factor was that the “unexplained” gender wage gap fell much faster in the 1980s than the 1990s. Our evidence suggests that changes in labor force selectivity, changes in gender differences in unmeasured characteristics and in labor market discrimination, as well as changes in the favorableness of demand shifts each may have contributed to the slowing convergence of the unexplained gender pay gap.