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Working Paper 8708 THE STRUCTURE OF THE FEMALEIMALE WAGE DIFFERENTIAL: I S I T WHO YOU ARE, WHAT YOU DO, OR WHERE YOU WORK? by E r i c a L. Groshen E r i c a L. Groshen i s an economist a t t h e Federal Reserve Bank o f Cleveland. The author thanks p r o f e s s o r s Richard B. Freeman and John T. Dunlop f o r h e l p i n o b t a i n i n g these data, and t h e Bureau o f Labor S t a t i s t i c s f o r p r o v i d i n g access t o them. Paula Loboda provided i n v a l u a b l e research a s s i s t a n c e . Comments from Paul Bauer, P a t t y Beeson, Francine Blau, John Bound, Charles Brown, S h i r l e y Cassing, Mary Dei l y , Randal 1 Eberts, and Joe Stone are g r a t e f u l l y acknowledged. Working papers o f the Federal Reserve Bank o f Cleveland a r e p r e l i m i n a r y m a t e r i a l s c i r c u l a t e d t o s t i m u l a t e discussion and c r i t i c a l comment. The views expressed h e r e i n a r e those o f t h e a u t h o r and n o t n e c e s s a r i l y those o f t h e Federal Reserve Bank o f Cleveland o r o f t h e Board o f Governors o f the Federal Reserve System. September 1987 ABSTRACT T h i s paper decomposes t h e observed wage d i f f e r e n c e between male and female workers i n t o t h e p o r t i o n s a s s o c i a t e d w i t h t h r e e types o f s e g r e g a t i o n and w i t h t h e i n d i v i d u a l ' s sex. The c o n t r i b u t i o n o f each t y p e o f s e g r e g a t i o n i s t h e p r o d u c t o f two f a c t o r s : t h e e x t e n t o f s e g r e g a t i o n and t h e wage p e n a l t y ( e s t i m a t e d c o e f f i c i e n t ) a s s o c i a t e d w i t h w o r k i n g i n a female- dominated constituent. I n f i v e Bureau o f Labor S t a t i s t i c s I n d u s t r y Wage Surveys, t h e e a r n i n g s o f men and women i n t h e same o c c u p a t i o n a t t h e same e s t a b l i s h m e n t d i f f e r b y o n l y 1%. Much o f t h e d i f f e r e n c e i n pay between men and women i s a s s o c i a t e d w i t h s e g r e g a t i o n by o c c u p a t i o n ( t h i s reduces women's wages by 11% t o 28%). B u t s e g r e g a t i o n by e s t a b l i s h m e n t and work group a l s o lowers t h e wages o f women by a t o t a l o f 12%. Comparisons a r e a l s o made between t h e u n i o n and nonunion s e c t o r s o f two industries. Union e s t a b l i s h m e n t s a r e c h a r a c t e r i z e d by l e s s v a r i a t i o n based on o c c u p a t i o n a l and i n d i v i d u a l wage p e n a l t i e s , b u t more v a r i a t i o n based on establishment segregation. THE STRUCTURE OF THE FEMALEIMALE WAGE DIFFERENTIAL: I S I T WHO YOU ARE, WHAT YOU DO, OR WHERE YOU WORK? I. I n t r o d u c t i o n A v a r i e t y o f p o l i c i e s have been enacted and proposed t o reduce wage differences between men and women. total differential. Each addresses c e r t a i n components o f t h e For example, equal pay p r o v i s i o n s focus on i n d i v i d u a l d i f f e r e n c e s w i t h i n work group; ' comparable worth t a r g e t s i nequal i t y based on p r o p o r t i o n female i n occupation o r work group; equal o p p o r t u n i t y l e g i s l a t i o n attempts t o reduce interemployer and work group segregation. The p o t e n t i a l e f f i c a c y o f each p o l i c y depends on the r e l a t i v e magnitude o f the component(s) addressed. For example, equal pay l e g i s l a t i o n may be f u l l y e f f e c t i v e , b u t i t w i l l n o t reduce the femalelmale wage d i f f e r e n t i a l s i g n i f i c a n t l y i f very l i t t l e i n e q u a l i t y i s due t o wage d i f f e r e n c e s between the sexes w i t h i n work group. Thus, one step toward comparing the p o l i c i e s i s t o consider which a r e aimed a t the l a r g e s t source(s). This paper addresses the question by e s t i m a t i n g the c o n t r i b u t i o n o f each of t h e f o l l o w i n g t o the wage d i s p a r i t y between men and women: d i f f e r e n c e s between i n d i v i d u a l s i n the same occupation and e s t a b l i shment, o r sex segregation by occupation, by e s t a b l i shment, o r by work group. The r o l e o f the workplace ( i . e . , establishment and work group) has been r e l a t i v e l y neglected i n previous s t u d i e s o f the e f f e c t of segregation on wages. The composition o f the femalelmale wage d i f f e r e n t i a l i s s t u d i e d i n f i v e i n d u s t r i e s , u s i n g Bureau o f Labor S t a t i s t i c s (BLS) I n d u s t r y Wage Surveys. A l t h o u g h most s t u d i e s a s c r i b e observed wage d i f f e r e n t i a l s t o d i f f e r e n c e s i n human c a p i t a l , many observed d i f f e r e n t i a l s ( e s p e c i a l l y those l i n k e d t o demographic c h a r a c t e r i s t i c s such as sex and r a c e ) d e f y attempts t o a t t r i b u t e them s o l e l y t o human c a p i t a l . The s i z e o f e s t i m a t e d i n d u s t r y , employer, and work group wage d i f f e r e n t i a l s suggests t h a t t h e y c o u l d be a l a r g e p a r t o f t h e wage d i f f e r e n c e s observed among races o r between men and women.' i n v e s t i g a t i o n o f t h e workplace as a source o f wage d i f f e r e n t i a l s Thus, seems p a r t i c u l a r l y relevant. Models o f t h e femalelmale wage d i f f e r e n t i a l f a l l i n t o t h r e e b a s i c groups: human c a p i t a l , compensating d i f f e r e n t i a l s , and d i s c r i m i n a t i o n . The f i r s t t y p e e x p l a i n s d i f f e r e n c e s i n earnings by d e f i c i e n c i e s i n a c q u i r e d human c a p i t a l (education, on- the- job- training, etc.). I n t h e s t r i c t v e r s i o n , women i n v e s t i n l e s s human c a p i t a l because t h e y expect t o work o u t s i d e t h e home f o r l e s s of t h e i r a d u l t l i v e s (Polachek C19811). Alternatively, differential returns o r c o s t s t o investment caused by d i s c r i m i n a t i o n c o u l d a l s o l i n k p r o p o r t i o n female w i t h l o w wages among occupations. i n t h i s model i s n o t obvious. I n e i t h e r case, t h e r o l e o f t h e workplace Most wage d i f f e r e n c e s should be a s s o c i a t e d w i t h o c c u p a t i o n and w i t h t h e i n d i v i d u a l w i t h i n t h e work group, unless e s t a b l i s h m e n t s o r work groups a r e s o r t e d by q u a l i t y . The second e x p l a n a t i o n assumes t h a t women have a g r e a t e r t a s t e f o r nonwage compensation (perhaps because o f uneven a l l o c a t i o n o f homemaking r e s p o n s i b i l i t i e s ) and t h a t employers g e n e r a l l y o f f e r t h e same b e n e f i t package t o groups of employees. Or, working c o n d i t i o n s a r e a s s o c i a t e d p r i m a r i l y w i t h o c c u p a t i o n o r i n d u s t r y , and women have s t r o n g e r p r e f e r e n c e s f o r c l e a n , q u i e t , f l e x i b l e , o r a t t r a c t i v e environments ( F i l e r C19831). a r e s o r t e d i n t o t h e high-benefitllow-wage jobs. I n e i t h e r v e r s i o n , women - 3 Compensating d i f f e r e n t i a l s should generate an a s s o c i a t i o n between s e g r e g a t i o n and wages i n e s t a b l i s h m e n t s and occupations. Work group e f f e c t s should be minimal, and l i m i t e d t o cases where work c o n d i t i o n s v a r y b y e s t a b l i s h m e n t w i t h i n o c c u p a t i o n o r where b e n e f i t packages change s i g n i f i c a n t l y among d i f f e r e n t occupations i n an e s t a b l i s h m e n t (e.g., nonexempt p o s i t i o n s ) . between exempt and Also, i n d i v i d u a l e f f e c t s should be p o s i t i v e , t o compensate women f o r t h e i n f e r i o r package o f b e n e f i t s o f f e r e d . F i n a l l y , t h e t h e o r e t i c a l l i t e r a t u r e o f f e r s v a r i o u s models of d i s c r i m i n a t i o n i n t h e ~ o r k p l a c e . ~The problem w i t h t h e s i m p l e s t models i s . t h a t employer d i s c r i m i n a t i o n should l o w e r p r o f i t s (unless i t i s due t o t a s t e s o f coworkers o r customers). Thus, owners o f c a p i t a l w i l l p r e f e r t o i n v e s t i n f i r m s t h a t do n o t d i s c r i m i n a t e , t h e r e b y r e d u c i n g t h e p r e v a l e n c e of discrimination. Agency c o s t s , however, i n t r o d u c e s l a c k i n t o t h e system, which loosens t h e d i s c i p l i n e imposed by t h e marketplace. Suppose t h a t , i n each e s t a b l i s h m e n t , managers e x e r c i s e t h e i r t a s t e f o r d i s c r i m i n a t i o n i n o n l y a few of t h e o c c u p a t i o n s t h e y oversee, o r t h a t o n l y a subset o f each e s t a b l i s h m e n t ' s supervisors discriminate. Then, a f i r m ' s expected g a i n s f r o m e l i m i n a t i n g d i s c r i m i n a t i o n may be small o r n e g a t i v e , when coupled w i t h t h e c o s t of i n t e r n a l monitoring. Furthermore, i f a l l f i r m s have a random amount o f d i s c r i m i n a t o r y a c t i v i t y among t h e i r s u p e r v i s o r s o r managers, most v a r i a t i o n i n d i s c r i m i n a t i o n occurs w i t h i n f i r m s , r a t h e r t h a n between them. T h i s v e r s i o n suggests t h a t s e g r e g a t i o n b y e s t a b l i s h m e n t w i l l have a s m a l l e r impact than s e g r e g a t i o n by work group. But e s t a b l i s h m e n t , work group, and i n d i v i d u a l sex w i l l a l l c o n t r i b u t e t o t h e femalelmale wage d i f f e r e n t i a l . L i t t l e e m p i r i c a l work has been o f f e r e d on t h e workplace e f f e c t s on wage d i f f e r e n t i a l s , i n p a r t because of d a t a l i m i t a t i o n s . I n a major e x c e p t i o n , B l a u (1977) proposes and t e s t s a model i n which employers s e t wages a c c o r d i n g t o e x t e r n a l wage contours and i n t e r n a l l a b o r markets, r a t h e r t h a n s o l e l y a c c o r d i n g t o l o c a l labor- market c o n d i t i o n s . Thus, f i r m s w i t h h i g h wages choose f r o m a queue o f a p p l i c a n t s , i n t r o d u c i n g l a t i t u d e f o r d i s c r i m i n a t i o n i n hiring. I n BLS Area Wage Surveys, B l a u f i n d s t h a t wages and t h e percentage o f females i n o n e ' s work group were n e g a t i v e l y c o r r e l a t e d w i t h i n o c c u p a t i o n , c o n t r o l l i n g f o r sex o f t h e i n d i v i d u a l . Another e x c e p t i o n i s B i e l b y and Baron (1984), who f i n d t h a t f i r m s a r e h i g h l y and permanently segregated by work group: i n d i v i d u a l s a r e employed i n work groups composed almost e n t i r e l y o f members o f t h e i r own sex. This s t u d y expands B l a u ' s work by comparing t h e s i z e o f f o u r components o f t h e femalelmale wage d i f f e r e n t i a l w i t h i n i n d u s t r y - - t h e i n d i v i d u a l , o c c u p a t i o n , e s t a b l i s h m e n t , and work group- - to e s t i m a t e how much each c o n t r i b u t e s t o t h e t o t a l observed d i f f e r e n t i a l . The observed femal elmal e wage d i f f e r e n t i a l is d i v i d e d i n t o s e v e r a l components t h a t each r e f l e c t t h e e x t e n t t o which sex s e g r e g a t i o n a s s o c i a t e d w i t h a labor- market s t r u c t u r e c o n t r i b u t e s t o t h e t o t a l d i f f e r e n t i a l i n a working p o p u l a t i o n . component depends on two f a c t o r s : I t w i l l be shown t h a t t h e s i z e of a t h e e x t e n t o f s e g r e g a t i o n by sex among c o n s t i t u e n t s o f t h e component, and t h e magnitude o f t h e p e n a l t y a s s o c i a t e d w i t h w o r k i n g i n a female- dominated c o n s t i t u e n t . The method uses o r d i n a r y l e a s t squares r e g r e s s i o n t o decompose an observed wage d i f f e r e n t i a l , w i t h o u t assuming any p a r t i c u l a r t h e o r y o f wage determination o r discrimination. I t p r o v i d e s a way t o examine t h e e x t e n t t o which segregation- based models have an e m p i r i c a l f o u n d a t i o n . The method o f decomposition i s a v a r i a n t o f t h a t i n t r o d u c e d i n Oaxaca (1973) and B l i n d e r ( 1 973). Method 11. For ease o f e x p o s i t i o n , t h e method i s presented i n terms o f o n l y two components ( i n d i v i d u a l and o c c u p a t i o n ) , a l t h o u g h two more ( e s t a b l i s h m e n t and work group) a r e considered i n t h e a c t u a l e s t i m a t i o n . i n d i v i d u a l i i n o c c u p a t i o n j, w i t h l o g wage Cansider t h e case o f W i j . L e t f i , = female dummy v a r i a b l e f o r i n d i v i d u a l i i n o c c u p a t i o n j, n = number o f i n d i v i d u a l s i n t h e working p o p u l a t i o n , n j = number o f i n d i v i d u a l s i n o c c u p a t i o n j, r = c c f i j l n , t h e p r o p o r t i o n o f t h e work f o r c e t h a t i s female, and j rj = i c f i j / n j , t h e p r o p o r t i o n o f o c c u p a t i o n j t h a t i s female. I The f o l l o w i n g wage e q u a t i o n i s e s t i m a t e d : wi, (1) = A + Gefij + Barj+ eij, where A i s t h e work- force mean wage and G i s t h e e s t i m a t e d wage e f f e c t o f b e i n g female, c o n t r o l l i n g f o r t h e p r o p o r t i o n female o f o n e ' s o c c u p a t i o n . B is t h e e s t i m a t e d wage e f f e c t o f w o r k i n g i n a female- dominated occupation, c o n t r o l l i n g f o r t h e sex o f t h e i n d i v i d u a l . A person who switched f r o m an a l l - m a l e o c c u p a t i o n t o an a l l - f e m a l e o c c u p a t i o n would s u f f e r an average wage L a s t , e , j i s t h e e s t i m a t e d e r r o r term. l o s s o f B. F o l l o w i n g Oaxaca (1973) and B l i n d e r (19731, t h e observed femalelmale wage d i f f e r e n t i a l i n a working p o p u l a t i o n i s s i m p l y t h e d i f f e r e n c e between t h e average wage o f women and t h e average wage o f men: D (2) where - = Wfemale - r; = c c f , r j 1 r n , j - ry = Wma i = G + B ( ~ -f F?), t h e mean p r o p o r t i o n female i n o c c u p a t i o n among females, and i c c (1-fi,)rj/(l-r>n, j e i t h e mean p r o p o r t i o n female i n o c c u p a t i o n among males. As D becomes more n e g a t i v e , t h e wage d i f f e r e n c e between men and women increases. The observed d i f f e r e n c e between t h e wages o f men and women i n t h e work f o r c e i s t h e sum o f G ( t h e e s t i m a t e d w i t h i n - o c c u p a t i o n wage d i f f e r e n t i a l between men and women) and a t e r m f o r t h e estimated impact o f s e g r e g a t i o n among o c c u p a t i o n s . The impact o f s e g r e g a t i o n i s t h e p r o d u c t o f two terms: B ( t h e wage change a s s o c i a t e d w i t h an i n c r e a s i n g c o n c e n t r a t i o n o f women i n an o c c u p a t i o n ) and t h e e x t e n t o f s e g r e g a t i o n among o c c u p a t i o n s ( t h e d i f f e r e n c e i n t h e average p r o p o r t i o n o f women i n t h e occupations h e l d by women compared t o t h a t o f t h e average o c c u p a t i o n h e l d by men). A c c o r d i n g l y , d e f i n e S as t h e e x t e n t o f segregation: S measures t h e e x t e n t o f s e g r e g a t i o n on a s c a l e from 0 t o 1 ( i n c r e a s i n g as o c c u p a t i o n s become more segregated) and can be a s s o c i a t e d w i t h a commonly used measure o f s e g r e g a t i o n . where p j = = s: j n,/n, Another a l g e b r a i c r e p r e s e n t a t i o n f o r S i s as f o l l o w s : t h e p r o p o r t i o n o f t h e work f o r c e i n o c c u p a t i o n j, and c C p j r g l - r 2 , t h e sample v a r i a n c e o f r j . j This form i s i n t u i t i v e l y a p p e a l i n g if one notes t h e range o f t h e v a r i a n c e of r j . A t t h e lower extreme, i f t h e work f o r c e were t o t a l l y i n t e g r a t e d , t h e n r, = r for a l l j, so t h e v a r i a n c e o f r j would be z e r o . On t h e o t h e r hand, t o t a l s e g r e g a t i o n o f t h e work f o r c e maximizes t h e v a r i a n c e o f r j : 2 (5) max s, = r(1-r)' + (1-r>(0-r)2 = r(1-r). j Thus, S, t h e r a t i o o f t h e v a r i a n c e o f r, t o r ( 1 - r ) , i s the r a t i o o f - 7 - t h e a c t u a l v a r i a n c e t o t h e maximum p o s s i b l e v a r i a n c e . i n v e s t i g a t i o n s o f t h e impact o f s e g r e g a t i o n (e.g., Most o t h e r B e l l e r [19841) use another measure, t h e displacement index, t o measure s e g r e g a t i o n . The p r o p e r t i e s o f t h e displacement index (SD) a r e q u i t e s i m i l a r t o those o f S.' The most f a m i l i a r v e r s i o n o f t h e f o r m u l a f o r SD i s as f o l l o w s : where M j = p r o p o r t i o n o f male work f o r c e i n o c c u p a t i o n j, and F j = . p r o p o r t i o n o f female work f o r c e i n o c c u p a t i o n j. I n t h e n o t a t i o n used i n t h i s paper, SD reduces t o t h e f o l l o w i n g : Comparing e x p r e s s i o n (7) t o e x p r e s s i o n ( 4 ) , i t i s c l e a r t h a t S and SD a r e b o t h r a t i o s o f a measure o f d e v i a t i o n t o t h e maximum p o s s i b l e v a r i a n c e . S and SD share common bounds (0 = p e r f e c t l y i n t e g r a t e d , t o 1 = c o m p l e t e l y segregated), and a r e composed o f t h e same terms. The d i f f e r e n c e between them i s t h a t SD measures d e v i a t i o n by t h e mean a b s o l u t e d e v i a t i o n o f p r o p o r t i o n female, w h i l e S takes t h e mean squared d e v i a t i o n . SD and S w i l l be most s i m i l a r c l o s e t o t h e bounds o r i f r i s c l o s e t o 112. The advantages o f t h e SD measure a r e i n s e n s i t i v i t y t o o u t l i e r s , and easy i n t e r p r e t a t i o n o f t h e p r o p o r t i o n o f women who would have t o be r e d i s t r i b u t e d among occupations i n o r d e r t o achieve p e r f e c t i n t e g r a t i o n . The p a r t i c u l a r advantage o f S i s i t s use i n t h e s i m p l e decomposition o f t h e femalefmale wage d i f f e r e n t i a l shown i n e q u a t i o n ( 2 ) . This t r e a t m e n t may be e a s i l y g e n e r a l i z e d t o i n c l u d e s e g r e g a t i o n among e s t a b l i s h m e n t s and o t h e r l a b o r market i n s t i t u t i o n s , s i m p l y by adding terms t h a t a r e t h e p r o d u c t o f t h e p e n a l t y and t h e e x t e n t o f s e g r e g a t i o n : where k Bk Sk = l a b o r market s t r u c t u r e k (occupation, e s t a b l i s h m e n t , o r work group), e s t i m a t e d c o e f f i c i e n t on p r o p o r t i o n female i n i n s t i t u t i o n k , and = r: = e x t e n t o f s e g r e g a t i o n among c o n s t i t u e n t s o f k . = Expression (8) i s a decomposition o f t h e t y p e i n t r o d u c e d by Oaxaca (1973) and B l i n d e r (1973>, where t h e male and female c o e f f i c i e n t s a r e c o n s t r a i n e d t o e q ~ a l i t y . ~Table 1 summarizes t h e a p p l i c a t i o n of t h i s technique. The components and t h e i r f a c t o r s a r e l i s t e d w i t h d e f i n i t i o n s and i n t e r p r e t a t i o n s . The sum o f t h e f o u r components i s t h e t o t a l observed wage d i f f e r e n t i a l . 111. D e s c r i p t i o n o f t h e Data T h i s study p r e s e n t s decompositions o f t h e femalelmale wage d i f f e r e n t i a l i n t h e miscellaneous p l a s t i c s products, l i f e i n s u r a n c e , n o n e l e c t r i c a l machinery, banking, and computer and d a t a p r o c e s s i n g i n d u s t r i e s . These i n d u s t r i e s were chosen as examples because t h e y employ s i g n i f i c a n t numbers o f b o t h men and women, r e p r e s e n t b o t h m a n u f a c t u r i n g and s e r v i c e i n d u s t r i e s , and have a l o w i n c i d e n c e o f i n c e n t i v e - b a s e d compensation. A n a l y s i s o f i n d u s t r i e s separat;ly a1 lows o c c u p a t i o n s t o be d e f i n e d n a r r o w l y , w h i l e a l a r g e p r o p o r t i o n o f each e m p l o y e r ' s work f o r c e i s covered. I n c r o s s - i n d u s t r y surveys, e i t h e r o c c u p a t i o n s must be v e r y b r o a d l y d e f i n e d o r t h e v a s t m a j o r i t y o f t h e employees o f each e s t a b l i s h m e n t must be excluded f r o m a n a l y s i s , because o n l y support occupations a r e employed i n common across employers. Since i n d u s t r i e s a r e themselves somewhat segregated by sex, b u t do n o t ( i n g e n e r a l ) o v e r l a p much i n occupations, a n a l y s i s w i t h i n i n d u s t r y tends - 9 - t o underestimate t h e c o n t r i b u t i o n o f e s t a b l i s h m e n t and work group s e g r e g a t i o n . The a n a l y s i s uses f i v e Bureau o f Labor S t a t i s t i c s I n d u s t r y Occupational Wage Surveys (INS). Table 2 p r e s e n t s means o f t h e r e l e v a n t c h a r a c t e r i s t i c s . The d a t a c o n s i s t o f t h e wages, sex, o c c u p a t i o n , and e s t a b l i s h m e n t i d e n t i f i e r o f i n d i v i d u a l p r o d u c t i o n and maintenance workers i n t h e m a n u f a c t u r i n g i n d u s t r i e s , and o f i n d i v i d u a l nonsupervisory workers i n t h e s e r v i c e industries. The j o b s covered a r e d e s c r i b e d i n g r e a t d e t a i 1, a r e p a r t i c u l a r t o t h e i n d u s t r y i n q u e s t i o n , and g e n e r a l l y cover a p p r o x i m a t e l y 60% o f e s t a b l i s h m e n t employment. Wages r e p o r t e d a r e s t r a i g h t - t i m e h o u r l y e a r n i n g s ( n o o v e r t i m e o r s h i f t premiums i n c l u d e d ) f o r h o u r l y workers, and average h o u r l y earnings f o r i n c e n t i v e workers. ' The surveys a r e e x t e n s i v e , c o v e r i n g 15,000 t o 76,000 workers i n 221 t o 876 establishments. I n g e n e r a l , e s t a b l i s h m e n t s surveyed f o r an INS a r e a random sample o f those employing 25 o r more workers i n t h e i n d u s t r y , though t h e c u t o f f v a r i e s somewhat by i n d u s t r y . A unique e s t a b l i s h m e n t i d e n t i f i e r i s p r o v i d e d f o r each p l a c e o f employment, b u t a c t u a l i d e n t i t y o f employers i s withheld. An i m p o r t a n t f e a t u r e o f these d a t a i s t h e d e t a i l o f t h e o c c u p a t i o n definitions. The appendix c o n s i s t s o f l i s t i n g s o f t h e j o b c l a s s i f i c a t i o n s surveyed i n t h e f i v e samples. For example, i n t h e p l a s t i c s sample, codes d i s t i n g u i s h among t h r e e o c c u p a t i o n s working on a blow- molding machine: " operate," " s e t up," and " s e t up and o p e r a t e . " This level o f i n d u s t r y - s p e c i f i c d e t a i l c o n t r o l s more c o m p l e t e l y f o r d i f f e r e n c e s i n j o b c o n t e n t and worker t r a i n i n g t h a n do t h e broader o c c u p a t i o n a l codes used i n o t h e r surveys; f o r example, f o u r - d i g i t D i c t i o n a r y o f Occupation T i t l e s o r t h r e e - d i g i t Census codes. F o l l o w i n g BLS p r a c t i c e , f o r b r e v i t y i n t h e d i s c u s s i o n t h a t f o l l o w s (except where noted), t h e term " o c c u p a t i o n " w i l l be used as a synonym f o r IWS j o b c l a s s i f i c a t i o n , which i s t h e more a c c u r a t e term. - 10 - IV. 1. Decomposition o f t h e FemaleIMale Wage D i f f e r e n t i a l i n F i v e I n d u s t r i e s Decomposition o f t h e D i f f e r e n t i a l i n Two M a n u f a c t u r i n g I n d u s t r i e s Table 3 r e p o r t s t h e decomposition o f t h e femalelmale wage d i f f e r e n t i a l i n t h e miscellaneous p l a s t i c s products and n o n e l e c t r i c a l machinery manufacturing industries. The t o t a l d i f f e r e n t i a l between t h e wages o f men and women i n t h e two samples (-.240 and -.298> i s s u b s t a n t i a l l y lower than t h e d i f f e r e n t i a l observed i n broader samples. For example, t h e C u r r e n t P o p u l a t i o n Survey u s u a l l y r e c o r d s a d i f f e r e n t i a l o f about 40% because o f t h e i n c l u s i o n o f w h i t e - c o l l a r workers and o t h e r i n d u s t r i e s . Thus, t h e r e s u l t s f o r t h e o c c u p a t i o n and e s t a b l i s h m e n t components below would almost c e r t a i n l y be l a r g e r i n a broader sample--because more d i v e r s e o c c u p a t i o n s and e s t a b l i s h m e n t s would be r e p r e s e n t e d . The e f f e c t s on t h e i n d i v i d u a l and work group components a r e d i f f i c u l t t o predict. F i r s t , l o g wages o f i n d i v i d u a l s a r e regressed on a c o n s t a n t term and f o u r regressors: a female dummy, and t h e p r o p o r t i o n female i n t h e i n d i v i d u a l ' s o c c u p a t i o n , e s t a b l ishment, and work group. The c o e f f i c i e n t s and s t a n d a r d e r r o r s f r o m t h i s r e g r e s s i o n a r e r e p o r t e d i n t h e f i r s t column o f Table 3. All e s t i m a t e d c o e f f i c i e n t s a r e n e g a t i v e and s i g n i f i c a n t , except f o r t h e i n d i v i d u a l t e r m i n machinery. The c o e f f i c i e n t s on t h e i n d i v i d u a l dummy i n b o t h i n d u s t r i e s a r e v e r y s m a l l , suggesting t h a t males and females i n t h e same o c c u p a t i o n and e s t a b l i s h m e n t ( i . e . , work group) a r e n o t p a i d v e r y d i f f e r e n t l y . The f a c t t h a t i n c l u s i o n o f simple l i n e a r measures o f "femaleness" o f o c c u p a t i o n , e s t a b l i s h m e n t , and work group reduces t h e c o e f f i c i e n t on t h e female dummy t o 1% o r l e s s suggests t h a t t h e s p e c i f i c a t i o n used i s appropriate. There i s no a l g e b r a i c reason t h a t t h e i n d i v i d u a l term should be reduced so d r a m a t i c a l l y . Although more complex measures and n o n l i n e a r i t i e s could be introduced, the maximum a d d i t i o n a l impact o f such terms i s l i m i t e d t o l e s s than 2%, the s i z e o f the i n d i v i d u a l component i n Table 3. I n both i n d u s t r i e s , the three c o e f f i c i e n t s on the p r o p o r t i o n female a r e a l l l a r g e , and occupation has the l a r g e s t c o e f f i c i e n t . Converting from l o g d i f f e r e n c e s t o percentage d i f f e r e n c e s , a switch from an all- male t o an a l l - f e m a l e occupation would mean a wage l o s s o f about 22% f o r a worker i n p l a s t i c s and a l o s s o f 36% f o r a worker i n machinery, regardless o f t h e person's sex. The wage impact o f such a switch may simply r e f l e c t l a r g e d i f f e r e n c e s i n the average human c a p i t a l between the sexes. The r e s u l t s f o r work group and establishment a r e l e s s c o n s i s t e n t across industry. A switch e i t h e r t o an establishment o r t o a work group dominated by the o t h e r sex e n t a i l s a wage change of about 9% i n p l a s t i c s . I n machinery, the c o e f f i c i e n t on a switch i n t h e sex composition o f one's establishment i s much l a r g e r (.330) than the e f f e c t o f a sex-of-work-group switch (.058). The second column o f Table 3 shows the e x t e n t o f segregation among occupations, establishments, and work groups; t h a t i s , the l i k e l i h o o d o f switches such as those mentioned above. Consistent w i t h B i e l b y and Baron (19841, work groups are h i g h l y segregated by sex. I t i s very unusual f o r a worker t o have a j o b i n a work group dominated by the opposite sex--more unusual than f o r the worker t o work i n an i n t e g r a t e d occupation. The variance o f p r o p o r t i o n female i n work groups i s 65% t o 75% o f what i t would be i n a t o t a l l y segregated s o c i e t y ( i . e . , single- sex work groups). where men and women always worked i n I n p l a s t i c s , occupations are more segregated than establishments, w h i l e the opposite i s t r u e i n machinery. - 12 The t h i r d column f o r each i n d u s t r y r e p o r t s t h e p r o d u c t of columns 1 and 2 f o r each l a b o r market s t r u c t u r e . I n each case, t h i s number i s t h e s i z e o f t h e wage d i f f e r e n t i a l t h a t would be observed i n t h e p o p u l a t i o n i f t h i s were t h e o n l y source o f femalelmale wage d i f f e r e n c e s . I t i s a l s o t h e amount by which t h e observed wage d i f f e r e n t i a l would decrease, were t h i s source o f t h e d i f f e r e n t i a l t o be e l i m i n a t e d . C o n s i s t e n t w i t h Blau (19771, Buckley (1971), McNulty (1967) and B i e l b y and Baron (19841, t h e r e s u l t s f r o m t h e two i n d u s t r i e s agree t h a t t h e s m a l l e s t source o f t h e d i f f e r e n t i a l i s i n d i v i d u a l sex w i t h i n work group. I n plastics, e l i m i n a t i o n o f t h i s source would narrow t h e wage gap between men and women b y o n l y about 1.6%, w h i l e i n machinery i t would leave t h e gap unchanged. I n p l a s t i c s , a l t h o u g h t h e c o e f f i c i e n t s on p r o p o r t i o n female i n e s t a b l i s h m e n t and work group a r e s i m i l a r , t h e g r e a t e r amount of s e g r e g a t i o n by work group causes a l a r g e r d i f f e r e n t i a l component. o n l y -.029 Establishment c o n t r i b u t e s l o g p o i n t s , w h i l e work group i s t h e source o f -.078 t h e t o t a l -.240 d i f f e r e n c e . log points o f I n machinery, e s t a b l i s h m e n t s a r e more h i g h l y segregated t h a n occupations, and more t h a n compensate f o r a lower wage p e n a l t y . Occupation, by v i r t u e o f t h e l a r g e wage p e n a l t y ( i . e . , c o e f f i c i e n t ) on p r o p o r t i o n female and t h e amount o f s e g r e g a t i o n among i t s c o n s t i t u e n t s , i s a s s o c i a t e d w i t h h a l f o f t h e observed d i f f e r e n c e i n wages between men and women. T h i s i s c o n s i s t e n t w i t h much o f t h e l i t e r a t u r e on o c c u p a t i o n a l s e g r e g a t i o n (e.g., B e l l e r C19841 and Johnson and Solon C19861). I n both i n d u s t r i e s , however, even i f o c c u p a t i o n s were e v e n l y i n t e g r a t e d , wages of men would s t i l l be 12% h i g h e r than those o f women. Another way t o l o o k a t t h e r e s u l t s i s t o n o t e t h a t i n p l a s t i c s , f o r example, a woman i n a 50% female o c c u p a t i o n earns about .14 l o g wage p o i n t s l e s s (-.016 p l u s one h a l f o f -.242) t h a n t h e average man i n t h e same - 13 establishment. But i f she worked i n an a l l - f e m a l e work group, h e r wages would be as low as i f she worked i n an a l l - f e m a l e occupation. And i f she worked a t an a l l - f e m a l e e s t a b l i s h m e n t , her wages would be .34 l o g wage p o i n t s l o w e r t h a n those o f a man working i n an a l l - m a l e e s t a b l i s h m e n t i n t h e same o c c u p a t i o n . But how l i k e l y a r e these s c e n a r i o s ? The amount o f s e g r e g a t i o n by each of these s t r u c t u r e s suggests t h a t single- sex work groups a r e q u i t e common. A p p a r e n t l y , i t i s unusual f o r a woman t o be employed i n an i n t e g r a t e d o r , p a r t i c u l a r l y , p r e d o m i n a n t l y male o c c u p a t i o n o r work group. For whatever reason (human c a p i t a l , p r e f e r e n c e s , o r d i s c r i m i n a t i o n ) , people work i n work groups composed p r e d o m i n a n t l y o f members o f t h e i r own sex. 2. Decomposition o f t h e D i f f e r e n t i a l i n Three S e r v i c e I n d u s t r i e s Table 4 r e p o r t s t h e decomposition o f t h e femalelmale wage d i f f e r e n t i a l i n three service industries. The t o t a l d i f f e r e n t i a l between t h e wages o f men and women i n t h e samples i s about -.45 l o g wage p o i n t s . s i m i l a r t o t h a t o f t h e U.S. This d i f f e r e n t i a l i s and i s s u b s t a n t i a l l y more t h a n t h e d i f f e r e n t i a l i n t h e two m a n u f a c t u r i ng i n d u s t r i es, where t h e occupations were n o t as v a r i e d . Nevertheless, the service i n d u s t r y r e s u l t s are f a i r l y consistent w i t h t h e manufacturing r e s u l t s . Most c o n s i s t e n t i s t h e s i z e o f t h e i n d i v i d u a l c o e f f i c i e n t . I t i s again v e r y small (-.013 t o -.017> and v i r t u a l l y t h e same as t h e -.016 e s t i m a t e i n plastics. Most o f t h e femalelmale d i f f e r e n t i a l a r i s e s f r o m r a t e s a p p l i e d t o a l l i n d i v i d u a l s i n a category, r a t h e r than f r o m d i f f e r e n c e s i n t h e t r e a t m e n t of individuals. Occupations i n t h e s e r v i c e s a r e about as segregated as those i n p l a s t i c s and machinery. However, banking and l i f e insurance e s t a b l i s h m e n t s a r e f a r l e s s segregated t h a n those i n computers and t h e m a n u f a c t u r i n g i n d u s t r i e s . Work groups appear t o be somewhat l e s s segregated i n t h e s e r v i c e s . - 14 - C o u n t e r a c t i n g lower s e g r e g a t i o n , e s t i m a t e d c o e f f i c i e n t s on p r o p o r t i o n female a r e g e n e r a l l y l a r g e r ( i n a b s o l u t e v a l u e ) i n t h e s e r v i c e samples. P r a c t i c a l l y t h e e n t i r e e x t r a d i f f e r e n t i a l i n t h e s e r v i c e samples ( r e l a t i v e t o those i n manufacturing) can a t t r i b u t e d t o t h e magnitude o f t h e o c c u p a t i o n coefficient i n the service industries. Although i n s e r v i c e s men and women a r e i n t h e same work group more o f t e n , wages a r e so s t r o n g l y l i n k e d t o p r o p o r t i o n male i n s e r v i c e o c c u p a t i o n s t h a t women earn s i g n i f i c a n t l y l e s s t h a n men i n these three i n d u s t r i e s . T h i s c o u l d r e f l e c t h i g h e r v a r i a t i o n i n t h e human c a p i t a l requirements (perhaps, t e c h n i c a l t r a i n i n g ) o f n o n s u p e r v i s o r y j o b s i n the service industries. The c o e f f i c i e n t s on p r o p o r t i o n female i n e s t a b l i s h m e n t a r e t i g h t l y c l u s t e r e d (-.256 t o -.375> and l a r g e r ( i n a b s o l u t e value) t h a n those f o r work group (+.023 t o -.283). E x t e n s i v e s e g r e g a t i o n among work groups m a g n i f i e s t h e impact o f t h e r e l a t i v e l y small c o e f f i c i e n t s on p r o p o r t i o n female i n work group. Thus, t h e sum o f t h e c o n t r i b u t i o n s o f e s t a b l i s h m e n t and work group i s q u i t e t i g h t l y c l u s t e r e d among i n d u s t r i e s , r a n g i n g f r o m a low o f .08 l o g p o i n t s (computers) t o a h i g h o f .18 l o g p o i n t s (machinery). 3. Unionism and t h e S t r u c t u r e o f t h e FemaleIMale Wage D i f f e r e n t i a l Tables 5 and 6 p e r f o r m t h e same decomposition as i n Table 3, f o r t h e u n i o n and nonunion e s t a b l i s h m e n t s i n t h e p l a s t i c s and machinery i n d u s t r i e s separately. The r e s u l t s a r e i n t r i g u i n g and suggest some major d i f f e r e n c e s between t h e u n i o n and nonunion s e c t o r s . While t h e t o t a l d i f f e r e n t i a l s and t h e p a t t e r n s o f e x t e n t o f s e g r e g a t i o n a r e about t h e same s i z e i n t h e union and nonunion s e c t o r s , t h e d i s t r i b u t i o n among components changes c o n s i d e r a b l y . A t the top o f the tables, the individual p o r t i o n o f the differential in p l a s t i c s i s about 2% i n nonunion j o b s and i s n o n e x i s t e n t i n u n i o n j o b s , which - 15 i s c o n s i s t e n t w i t h t h e impact o f union s t a n d a r d - r a t e p o l i c i e s (Freeman C19821). I n machinery, v i r t u a l l y no d i f f e r e n c e e x i s t s w i t h i n work group i n e i t h e r t h e u n i o n o r nonunion s e c t o r . Moving t o the f o u r t h row, t h e s i z e o f t h e work group component i s a b o u t t h e same i n t h e union and nonunion s e c t o r s f o r p l a s t i c s , b u t i s worse f o r union women i n t h e machinery sample (due t o d i f f e r e n c e s i n c o e f f i c i e n t s ) . Two r e s u l t s stand o u t . Among occupations, u n i o n standard- rate p o l i c i e s s u b s t a n t i a l l y diminish t h e c o n t r i b u t i o n o f occupational segregation t o t h e wage d i f f e r e n t i a l i n b o t h i n d u s t r i e s . moderate amount o f comparable worth. I n e f f e c t , unions i n s t i t u t e some That i s , w h i l e occupations a r e e q u a l l y segregated i n t h e u n i o n and nonunion s e c t o r s , t h e c o e f f i c i e n t on p e r c e n t female i n occupation i s o n e - t h i r d t o four- sevenths l o w e r i n t h e u n i o n s e c t o r . U n i o n i z a t i o n may n o t d i m i n i s h o c c u p a t i o n a l s e g r e g a t i o n , b u t i t a p p a r e n t l y s u b s t a n t i a l l y reduces t h e wage p e n a l t y a s s o c i a t e d w i t h such s e g r e g a t i o n . The most unexpected d i f f e r e n c e between t h e s e c t o r s i s i n t h e e s t a b l i s h m e n t component. I n p l a s t i c s , t h e estimated c o e f f i c i e n t on p e r c e n t female i n t h e nonunion s e c t o r i s zero, compared t o -.I56 t h e nonunion c o e f f i c i e n t i s -.152, under u n i o n i z a t i o n . I n machinery, which r i s e s t o -.406 under u n i o n i z a t i o n . T h i s e f f e c t has a number o f p o t e n t i a l e x p l a n a t i o n s t h a t cannot be d i s t i n g u i s h e d here: 1. Unions w i t h more male workers a r e more s u c c e s s f u l a t e x t r a c t i n g r e n t s from employers; 2. Union employers f o r c e d t o pay above- market wages t o workers s e l e c t p r o p o r t i o n a l l y more males f r o m t h e queue o f a p p l i c a n t s a t t r a c t e d by t h e h i g h wages ; 3. Establishments employing more men a r e more p r o d u c t i v e , b u t o n l y i n a u n i o n i z e d s e t t i n g can workers c l a i m some o f these r e n t s ; o r - 16 4. Women have a g r e a t e r t a s t e f o r nonwage compensation and can v o i c e t h e i r preferences i n a u n i o n i z e d s e t t i n g . A f i n a l e f f e c t i n these i n d u s t r i e s i s t h a t u n i o n employers i n b o t h i n d u s t r i e s employ fewer women t h a n t h e i r nonunion c o u n t e r p a r t s , c o n s i s t e n t w i t h Blau (1977). I n s h o r t , these r e s u l t s i n v i t e more i n v e s t i g a t i o n i n t o t h e r e l a t i o n s h i p between u n i o n i z a t i o n and t h e s t r u c t u r e o f t h e femalelmale wage differential. V. Conclusion 1. Findinqs This paper a p p l i e s a decomposition o f t h e femalelmale wage d i f f e r e n t i a l t h a t c l a r i f i e s t h e c o n n e c t i o n between s e g r e g a t i o n and wage d i s p a r i t i e s . For a l a b o r market i n s t i t u t i o n t o be a s s o c i a t e d w i t h i n e q u a l i t y , two c o n d i t i o n s a r e necessary: i t s c o n s t i t u e n t s must be segregated, and wages must d e c l i n e w i t h i n c r e a s i n g p r o p o r t i o n s o f female workers. The v a r i a n c e o f p r o p o r t i o n f e m a l e among c o n s t i t u e n t s must be s i z a b l e , and t h e c o e f f i c i e n t on p r o p o r t i o n female i n t h e combined wage r e g r e s s i o n must be s i g n i f i c a n t and n e g a t i v e , o r s e g r e g a t i o n a s s o c i a t e d w i t h t h a t i n s t i t u t i o n i s n o t a l a r g e source o f t h e femalelmale wage d i f f e r e n t i a l . T h i s decomposition suggests t h a t p o l i c y a t t e m p t s t o reduce i n e q u a l i t y may be e v a l u a t e d on t h e b a s i s o f t h e p o t e n t i a l impact o f t h e proposal on t h e differential. Furthermore, t h e r e a r e two p o t e n t i a l t a r g e t s i n t h e r e d u c t i o n o f segregation- based sources o f i n e q u a l i t y : s i z e o f t h e wage p e n a l t y . t h e e x t e n t o f s e g r e g a t i o n and t h e Elimination o f either i s s u f f i c i e n t t o eliminate a source o f i n e q u a l i t y , b u t one may be e a s i e r t o implement t h a n t h e o t h e r . - 17 The e m p i r i c a l f i n d i n g s r e p o r t e d i n t h i s paper a r e remarkably c o n s i s t e n t across t h e f i v e i n d u s t r i e s s t u d i e d : 1. Wages o f males and females i n t h e same o c c u p a t i o n and e s t a b l i s h m e n t d i f f e r by about 1%. 2. The l a r g e s t source o f t h e femalelmale wage d i f f e r e n t i a l i s t h e a s s o c i a t i o n between wage r a t e s and p r o p o r t i o n female i n occupations, which accounts f o r h a l f t o t h r e e - q u a r t e r s o f t h e d i f f e r e n t i a l observed, o r a d i f f e r e n c e i n wages o f 11% (manufacturing) t o 26% ( s e r v i c e s ) when c o n v e r t e d t o percentages. The wage l o s s a s s o c i a t e d w i t h a s w i t c h f r o m an a l l - m a l e t o an a l l - f e m a l e o c c u p a t i o n ranges f r o m 21% t o 57% i n t h e f i v e i n d u s t r i e s s t u d i e d . 3. S e g r e g a t i o n by e s t a b l i s h m e n t w i t h i n i n d u s t r y and by work group ( i . e . , t h e s t r u c t u r e s most under c o n t r o l o f employers) a l s o c o n t r i b u t e s s i g n i f i c a n t l y t o wage i n e q u a l i t ~ Work . ~ groups a r e f a r more segregated t h a n e s t a b l i s h m e n t s , b u t t h e wage p e n a l t y a s s o c i a t e d w i t h an i n c r e a s i n g p r o p o r t i o n female i s l a r g e r f o r e s t a b l i s h m e n t s than f o r work groups. These o f f s e t t i n g f a c t o r s cause v a r i a t i o n i n t h e r e l a t i v e impact o f e s t a b l i s h m e n t and work group s e g r e g a t i o n among i n d u s t r i e s ; s e g r e g a t i o n b y each o f these two s t r u c t u r e s reduces women's wages by 6% t o 7%, f o r a t o t a l l o s s o f 8% t o 16% ( o r from one- quarter t o o n e - h a l f o f t h e t o t a l d i f f e r e n t i a1 1. 4. I n two m a n u f a c t u r i n g i n d u s t r i e s , u n i o n i s m has a pronounced e f f e c t on t h e composition o f t h e femalelmale wage d i f f e r e n t i a l w i t h o u t a f f e c t i n g p a t t e r n s o f segregation. Any wage d i s p a r i t y t h a t e x i s t s between men and women i n t h e same work group disappears under unionism. w i t h two o t h e r i n t e r e s t i n g e f f e c t s : Unionism i s a l s o a s s o c i a t e d wages a r e l e s s c l o s e l y t i e d t o t h e p e r c e n t female i n o n e ' s occupation, b u t a r e more c l o s e l y t i e d t o t h e p r o p o r t i o n female i n o n e ' s e s t a b l i s h m e n t . - 18 - These figures suggest that men and women who work in the same occupation and establishment earn about the same amount. However, occupations are either mostly male or mostly female, and within establishments, occupations are almost completely segregated. Furthermore, establishments as a whole tend to employ either more men or more women than average in the work force for the industry. Thus, the role of high-wage employers in segregation takes one of two forms. If their wages for all occupations are higher than average, they tend to concentrate on hiring men for all occupations. Just as important empirically, when they pay a subset of occupations more than their occupational average (adjusting for overall establishment differential), they hire a disproportionate number of men for those work groups. So, even a worker who has chosen an integrated occupation will probably be hired to work primarily with members of hislher own sex. If he is male, this will tend to raise his wages. If she is female, it will lower them. 2. Relevance to Theory In order to fully evaluate policy to reduce the femalelmale wage differential, it is necessary to know the source(s> of the differential. Although this decomposition cannot fully distinguish among the three major models of the source of the femalelmale wage differential, it throws some light on which versions of each model are most consistent with observed patterns. In particular, any version invoked must predict no sex differential within work group, and wide segregation by sex, especially among work groups. Omission of human capital or worker quality variables that are negatively correlated with proportion female would bias downward the estimated coefficient on proportion female for institutions whose constituents are - s o r t e d by human c a p i t a l . 19 - No doubt, a s i g n i f i c a n t p o r t i o n o f t h e o c c u p a t i o n component i s due t o d i f f e r e n c e s i n t h e human c a p i t a l o f men and women. As a c o r o l l a r y , t h e r e a r e no s i z a b l e d i f f e r e n c e s i n human c a p i t a l between men and women w i t h i n t h e work group. That makes p r o b l e m a t i c t h e importance o f t h e work group and e s t a b l i s h m e n t components ( c o n t r o l l i n g f o r p r o p o r t i o n female i n occupation) w i t h i n a pure human c a p i t a l framework. Research i s needed on t h e q u e s t i o n o f whether f i r m s e f f e c t i v e l y s o r t among a p p l i c a n t s on t h e b a s i s of q u a l i t y w i t h i n occupation. I f such s o r t i n g does n o t t a k e p l a c e , o n e - t h i r d t o one - half o f t h e d i f f e r e n t i a l ( t h e work group and e s t a b l i s h m e n t components) i s n o t due t o d i f f e r e n t i a l p r o d u c t i v i t y . Previous e m p i r i c a l evidence f o r t h e e x i s t e n c e o f s u b s t a n t i a l compensating d i f f e r e n t i a l s i s weak, b o t h f o r w orking c o n d i t i o n s (Brown C19801, Smith C19791, somewhat countered by F i l e r C19831) and f o r f r i n g e b e n e f i t s (Freeman C19811>, Smith and Ehrenberg C19811, and A t r o s t i c C19831). I n t h i s study, t h e i n d i v i d u a l component i s n o t p o s i t i v e , and t h e work group component i s sizable. Combined w i t h weak evidence on t h e impact of compensating d i f f e r e n t i a l s i n g e n e r a l , these r e s u l t s argue a g a i n s t e q u a l i z i n g d i f f e r e n c e s , except, perhaps, among occupations. As i n o t h e r s t u d i e s , evidence o f d i s c r i m i n a t i o n i n t h i s case c o n s i s t s p a r t l y o f p r o v i d i n g d i r e c t evidence t o e l i m i n a t e competing t h e o r i e s . " However, t h e p a t t e r n uncovered here ( p r i m a r i l y t h e s i z e o f t h e work group and e s t a b l i s h m e n t components) i s c o n s i s t e n t w i t h t h e e x i s t e n c e o f d i s c r i m i n a t i o n by employers. To t h e e x t e n t t h a t t h i s p a t t e r n a r i s e s f r o m d i s c r i m i n a t o r y b e h a v i o r , t h e d i r e c t i o n o f c a u s a l i t y i s o f g r e a t i n t e r e s t , b u t these r e s u l t s cannot d i s t i n g u i s h whether (exogenously) high-wage employers tend t o d i s c r i m i n a t e , or whether d i s c r i m i n a t o r s a r e f o r c e d t o pay h i g h wages. The decomposition performed here suggests some i m p o r t a n t t o p i c s f o r f u r t h e r research. I n p a r t i c u l a r , t o what e x t e n t do employers s o r t among j o b - 20 a p p l i c a n t s by p r o d u c t i v i t y - r e l a t e d c h a r a c t e r i s t i c s ? Are d i s c r i m i n a t o r s f o r c e d t o pay h i g h wages, o r do high-wage employers tend t o d i s c r i m i n a t e ? determines t h e sex composition o f a work group? What What i s t h e reason f o r t h e h i g h e r a s s o c i a t i o n between p r o p o r t i o n female and wages i n u n i o n e s t a b l i s h m e n t s ? 3. Relevance t o P o l i c y These f i n d i n g s a r e b e s t i n t e r p r e t e d i n l i g h t o f e x t a n t and proposed p o l i c i e s t o reduce wage i n e q u a l i t y between men and women. summary o f f i v e such p o l i c i e s : Table 7 p r e s e n t s a f o u r f e d e r a l a c t s o r o r d e r s , and comparable w o r t h (which has been proposed, n o t enacted). Table 8 r e l a t e s t h e p r o v i s i o n s d e s c r i b e d i n Table 7 t o t h e decomposition performed i n t h i s paper. Each component's f a c t o r s and t h e i r mean values (as e s t i m a t e d here) a r e l i s t e d w i t h t h e p r o v i s i o n s i n t e n d e d t o reduce them, d i s t i n g u i s h i n g between p r o v i s i o n s aimed a t human c a p i t a l and employer d i s c r i m i n a t i o n models. The compensating d i f f e r e n t i a l model i s n o t i n c l u d e d because a l l b e h a v i o r i s e f f i c i e n t under t h i s model, so t o t h e e x t e n t t h a t t h e sex d i f f e r e n t i a l compensating d i f f e r e n t i a l , no c o r r e c t i v e p o l i c i e s a r e necessary. is a Under a human c a p i t a l model, equal access t o e d u c a t i o n may i n c r e a s e t h e p r o d u c t i v i t y of women, r e d u c i n g t h e i n d i v i d u a l and o c c u p a t i o n a l components. 1 1 I n c o n t r a s t , d i s c r i m i n a t i o n e x p l a n a t i o n s generate two p o t e n t i a l p o l i c y i n s t r u m e n t s f o r t h e t h r e e components o f t h e d i f f e r e n t i a l a s s o c i a t e d w i t h segregation. The i n d i v i d u a l component (which i s n o t a s s o c i a t e d w i t h s e g r e g a t i o n ) has o n l y one p o t e n t i a l i n s t r u m e n t : l o w e r i n g t h e wage p e n a l t y a s s o c i a t e d w i t h an i n d i v i d u a l ' s sex w i t h i n work group- - via equal pay and perhaps EEO t r a i n i n g . For t h e o t h e r t h r e e components, t h e two p o t e n t i a l i n s t r u m e n t s a r e r e d u c t i o n o f s e g r e g a t i o n ( t h r o u g h EEO p r o v i s i o n s and a f f i r m a t i v e a c t i o n ) and r e d u c t i o n o f t h e wage p e n a l t y ( t h r o u g h comparable worth). - 21 - How e f f e c t i v e c o u l d each o f these p o l i c i e s be? Taking t h e f o u r components i n d i v i d u a l l y , wages o f women a r e o n l y 1% below those o f men i n t h e i r work group. T h i s , then, i s t h e maximum p o s s i b l e e f f e c t o f t h e p r o v i s i o n s t a r g e t e d a t t h i s component: i n p a r t i c u l a r , equal pay, b u t a l s o p a r t s o f equal e d u c a t i o n and EEO t r a i n i n g . E i t h e r these p r o v i s i o n s have a l r e a d y been q u i t e s u c c e s s f u l , o r t h i s component was never t h e main source o f t h e differential. '* I n c o n t r a s t , p o l i c i e s t h a t reduce t h e occupation component c o u l d c u t t h e femalelmale wage d i f f e r e n t i a l by o n e - h a l f (manufacturing) t o t h r e e - q u a r t e r s ( s e r v i c e s ) i n o u r samples. The n e x t l a r g e s t components a r e work group and e s t a b l i s h m e n t , which t o g e t h e r account f o r about a 13% r e d u c t i o n i n women's r e l a t i v e wages. Unless e s t a b l i s h m e n t s and work groups a r e s o r t e d by human c a p i t a l t h a t i s u n e q u a l l y d i s t r i b u t e d between men and women, t h e p r o v i s i o n s based on models o f discrimination o f f e r the only solutions. EEO, a f f i r m a t i v e a c t i o n , and equal education have been on t h e books f o r more t h a n a decade, w h i l e t h e f e m a l e l m a l e wage d i f f e r e n t i a l remains l a r g e . These p o l i c i e s aim t o reduce wage i n e q u a l i t y by r e d u c i n g a1 1 t h r e e types of segregation, i.e., So, S e , and Sw. I f people have judged them i n e f f e c t i v e , i t i s no s u r p r i s e t h a t those i n t e r e s t e d i n r e d u c i n g t h e d i f f e r e n t i a l would support comparable worth--because i t s t a r g e t s a r e B O and Bw, t h e o t h e r w i s e u n r e g u l a t e d f a c t o r s o f t h e two l a r g e s t components of t h e wage d i f f e r e n t i a l . Footnotes I n t h i s paper, t h e term "work group" r e f e r s t o t h e occupatione s t a b l i s h m e n t i n t e r a c t i o n ; t h a t i s , t o a l l employees w i t h t h e same occupation ( j o b c l a s s i f i c a t i o n ) i n a p a r t i c u l a r establishment. I n d u s t r y wage d i f f e r e n t i a l s p e r s i s t i n t h e f a c e o f a t t e m p t s t o a t t r i b u t e them t o human c a p i t a l . See Dickens and Katz (1986) and Krueger and Summers (1986) f o r r e c e n t summaries o f these i n v e s t i g a t i o n s . A l s o , Groshen (1986) shows t h a t even w i t h i n i n d u s t r i e s , s u b s t a n t i a l s t a b l e wage d i f f e r e n t i a l s e x i s t among employers and work groups, c o n t r o l l i n g f o r v e r y d e t a i l e d occupation, whereas wage v a r i a t i o n among i n d i v i d u a l s w i t h i n a work group i s minimal. See B l a u and Ferber (1986) and Reskin and Hartmann (1986) f o r summaries. W i l l i a m s and R e g i s t e r (1986) p e r f o r m a s i m i l a r a n a l y s i s on U.S. Census d a t a f o r 50 c i t i e s and e i g h t o c c u p a t i o n s and f i n d t h a t wages a r e n e g a t i v e l y c o r r e l a t e d w i t h p r o p o r t i o n male w i t h i n o c c u p a t i o n i n a c i t y , c o n t r o l l i n g f o r various characteristics o f the c i t y . The p r o p e r t i e s o f t h e displacement index a r e e x p l o r e d i n Duncan and Duncan ( 1 955). ' h i s c o n s t r a i n t i s a p p r o p r i a t e because e s t a b l i s h m e n t wage p o l i c i e s a r e ( b y aw) designed t o be s e x - b l i n d i n t h e i r a p p l i c a t i o n . What d i f f e r s between ,he sexes i s t h e i r access t o p o s i t i o n s . Oaxaca (1973) e s t i m a t e s s e p a r a t e e q u a t i o n s f o r men and women, d i v i d i n g t h e d i f f e r e n t i a l s between t h e p o r t i o n s due t o d i f f e r e n c e s i n slopes f r o m those due t o d i f f e r e n c e s i n mean values o f independent v a r i a b l e s . A p o s i t i v e c o e f f i c i e n t suggests t h a t wages i n c r e a s e w i t h t h e p r o p o r t i o n female, c o u n t e r a c t i n g t h e e f f e c t o f t h e n e g a t i v e c o e f f i c i e n t s t o some extent. Work group s e g r e g a t i o n i s c o n t r o l l e d by employers i n t h e sense t h a t t h e y a p p a r e n t l y have a s t r o n g tendency n o t t o employ b o t h men and women i n t h e same o c c u p a t i o n . Even i n h e a v i l y female occupations, t h e few males i n t h e o c c u p a t i o n a r e c l u s t e r e d i n j u s t a few e s t a b l i s h m e n t s . Note t h a t i f s e g r e g a t i o n by i n d u s t r y were added t o t h e e s t a b l i s h m e n t e f f e c t (as i n Blau C19771), t h e e s t a b l i s h m e n t component would c l e a r l y dominate t h e work group component. T h i s phenomenon i s n o t unexpected when t h e t y p e o f d i s c r i m i n a t i o n under investigation i s illegal. 11. P o l i c y p r e s c r i p t i o n s w i l l be i n e f f e c t i v e o r i n e f f i c i e n t i f t h e y i n t e r f e r e w i t h u n c o n s t r a i n e d o p t i m i z a t i o n on t h e p a r t o f market p a r t i c i p a n t s . Thus, equal access t o e d u c a t i o n f o r women w i l l reduce t h e d i f f e r e n t i a l o n l y t o t h e e x t e n t t h a t p r e v i o u s i n e q u a l i t i e s i n access l e d t o d i f f e r e n t i a l a c q u i s i t i o n o f human c a p i t a l . An equal d i s t r i b u t i o n o f human c a p i t a l would e l i m i n a t e t h e c o r r e l a t i o n between p r o p o r t i o n female and t h e human c a p i t a l requirements o f a j o b , so t h e e s t i m a t e d c o e f f i c i e n t would be zero. The r e a l reason f o r d e c l i n e i n i n e q u a l i t y would be t h e r e d u c t i o n i n segregation by sex. A l l c o r r e c t l y measured wage d i f f e r e n t i a l s would remain t h e same, because t h e y a r e based on p r o d u c t i v i t y d i f f e r e n c e s , b u t women would h o l d more o f t h e high-wage j o b s . The p o t e n t i a l e f f i c a c y o f equal e d u c a t i o n on t h e e s t a b l i s h m e n t and work group components depends on whether some e s t a b l i s h m e n t s r e q u i r e more human c a p i t a l i n a l l o r some occupations than do o t h e r s . 12. A t h i r d p o s s i b i l i t y i s t h a t employers adapted t o t h e i n t r u s i o n o f equal pay l e g i s l a t i o n by r e d e f i n i n g j o b t i t l e s . Workers o f d i f f e r e n t sex were given s l i g h t l y d i f f e r e n t r e s p o n s i b i l i t i e s i n order t o preserve t r a d i t i o n a l wage d i s p a r i t i e s between women and men w i t h i n work group and t o j u s t i f y t h e i r d i f f e r e n t pay schedules. The s i z e o f t h e work group component w i l l increase w i t h t h e e x t e n t t o which j o b s were r e d e f i n e d a r b i t r a r i l y f o r t h i s purpose by independent e s t a b l i s h m e n t s . References A t r o s t i c , B.K. " A l t e r n a t i v e Pay Measures and Labor M a r k e t D i f f e r e n t i a l s , " U.S. Department o f Labor O f f i c e o f Research and E v a l u a t i o n , Bureau o f Labor S t a t i s t i c s Working Paper No. 127, March 1983. B e l l e r , Andrea. "Trends i n O c c u p a t i o n a l S e g r e g a t i o n b y Sex and Race, 1960-1981," i n Barbara F. Reski n, Ed., Sex s e g r e g a t i o n - i n t h e Workplace: Trends, E x p l a n a t i o n s , Remedies, 1984: N a t i o n a l Academy Press, Washington, D.C., 11-26. B i e l b y , W i l l i a m T., and James N. Baron. " A Woman's P l a c e i s With Other Women: Sex S e g r e g a t i o n W i t h i n O r g a n i z a t i o n s , " i n B a r b a r a F. Reskin, Ed., Sex S e g r e g a t i o n i n t h e Workplace: Trends, E x p l a n a t i o n s , Remedies, 1984: N a t i o n a - l Academy Press, Washington, D.C., 27-55. Blau, F r a n c i n e D. Lexington, Mass. Equal Pay i n t h e O f f i c e , 1977: D.C. Heath and Co., Blau, Francine, and Marianne F e r b e r . The Economics o f Women, Men and Work, 1986: P r e n t i c e - H a l l , Simon & S c h u s t e r , I n c . , Englewood C l i f f s , New J e r s e y . B l i n d e r , Alan. "Wage D i s c r i m i n a t i o n : Reduced Form and S t r u c t u r a l E s t i m a t e s , " Journal, o f Human Resources, v o l . 8, no. 4 ( F a l l 19731, 436-455. Brown, C h a r l e s . " E q u a l i z i n g D i f f e r e n c e s i n t h e Labor M a r k e t , " Q u a r t e r l y J o u r n a l o f Economics, v o l . 94, no. 1 (February 1980>, 113-134. Buckley, John E. "Pay D i f f e r e n c e s Between Men and Women i n t h e Same Job," M o n t h l y Labor Review, v o l . 94, no. 11 (November 1971), 36-39. Bureau of Labor S t a t i s t i c s . " I n d u s t r y Wage Survey: Banking, February 1980," U.S. Department o f Labor, B u l l e t i n 2099, September 1981. . " I n d u s t r y Wage Survey: L i f e Insurance, F e b r u a r y 1980," U.S. Department o f Labor, B u l l e t i n 2119, December 1981. . " I n d u s t r y Wage Survey: M i s c e l l a n e o u s P l a s t i c s , September 1974," U.S. Department o f Labor, B u l l e t i n 1914, June 1976. Dickens, W i l l i a m , and L a r r y K a t z . " I n d u s t r y Wage P a t t e r n s and Theories o f Wage D e t e r m i n a t i o n , " u n p u b l i s h e d paper, March 1986. Duncan, O t i s D., and B e v e r l y Duncan. "A M e t h o d o l o g i c a l A n a l y s i s o f S e g r e g a t i o n Indexes," American S o c i o l o g i c a l Review, v o l . 20 ( A p r i l 1955), 210-217. F i l e r . Randall K. " Sexual D i f f e r e n c e s i n Earninas: The R o l e o f I n d i v i d u a l p e r s o n a l i t i e s and Tastes," J o u r n a l o f Human ~eso;rces, v o l . 18, no. 1 ( W i n t e r 1983), 82-99. Freeman, Richard B. "The E f f e c t o f Unionism on F r i n g e B e n e f i t s , " I n d u s t r i a l and Labor R e l a t i o n s Review, v o l . 34, no. 4 ( J u l y 19811, 489-509. . "Union Wage P r a c t i c e s and Wage D i s p e r s i o n W i t h i n Establishments," I n d u s t r i a l and Labor R e l a t i o n s Review, v o l . 36, no. 1 (October 19821, 3-21. , and Jonathan S. Leonard. "Union Maids: Unions and t h e Female Workforce," Paper presented a t t h e Conference on Gender i n t h e Workplace, The Brookings I n s t i t u t i o n , November 15-16, 1984. Groshen, E r i c a . "Sources o f Wage D i s p e r s i o n : How Much Do Employers M a t t e r ? " Ph.D. D i s s e r t a t i o n , Harvard U n i v e r s i t y , Cambridge, Mass., 1986. Johnson, George, and Gary Solon. " Estimates of t h e D i r e c t E f f e c t s o f Comparable Worth P o l i c y , " American Economic Review, v o l . 76, no. 5 (December 19861, 1117-1125. Krueger, A l a n B., and Lawrence H. Summers. " E f f i c i e n c y Wages and t h e Wage S t r u c t u r e , " N a t i o n a l Bureau o f Economic Research Working Paper No. 1952, June 1 986. McNul t y , Donald J. " D i f f e r e n c e s i n Pay Between Men and Women Workers ," Monthly Labor Review, v o l . 90, no. 12 (December 19671, 40-43. Oaxaca, Ronald. "Male-Female Wage D i f f e r e n t i a l s i n Urban Labor Markets," I n t e r n a t i o n a l Economic Review, v o l . 14, no. 3 (October 19731, 693-709. Polachek, Solomon W. " Occupational S e l f - s e l e c t i o n : A Human C a p i t a l Approach t o Sex D i f f e r e n c e s i n Occupational S t r u c t u r e , " Review o f Economics and S t a t i s t i c s , v o l . 63, no. 1 (February 19811, 60-69. Reskin, Barbara F., and H e i d i I. Hartmann, Eds. Women's Work, Men's Work: Sex Segregation on t h e Job, 1986: N a t i o n a l Academy Press, Washington, D.C. Smith, Robert S. "Compensating Wage D i f f e r e n t i a l s and P u b l i c P o l i c y : A Review," I n d u s t r i a l and Labor R e l a t i o n s Review, v o l . 32, no. 3 ( A p r i l 19791, 339-352. Smith, Robert, and Ronald G. Ehrenberg. " E s t i m a t i n g Wage-Fringe T r a d e - o f f s : Some Data Problems," N a t i o n a l Bureau o f Economic Research Working Paper No. 827, December 1981 . W i l l i a m s , Donald R., and Charles A. R e g i s t e r . " Regional V a r i a t i o n s i n Earnings and t h e Gender Composition o f Employment: I s 'Women's Work' ~ n d e r v aued?" l J o u r n a l o f ~ c o n o mci I s s u e s ,' v o j . 20, no. 4 (December 19861, 1121-1 134. Table 1 Summary o f Terms i n t h e Decomposition o f t h e FemaleIMale Wage D i f f e r e n t i a l i n a P o p u l a t i o n Component (Estimated Size) Individual (G ) Factor G Occupation Segregation (BO'SO) Be E s t a b l i shment Segregation (B e 'Se> Work Group Segregation (0"-Sw> Definition Estimated c o e f f i c i e n t on female dummy i n t h e wage e q u a t i o n below. Interpretation Average d i f f e r e n c e i n wages between men and women i n t h e same o c c u p a t i o n i n t h e same e s t a b l i s h m e n t ( i . e . , i n t h e same work g r o u p ) . Estimated c o e f f i c i e n t on p r o p o r t i o n female o f occupation i n the wage e q u a t i o n below. Wage p e n a l t y a s s o c i a t e d w i t h increasing proportion female i n an o c c u p a t i o n . The d i f f e r e n c e between an a l l - f e m a l e and an a l l - m a l e occupation. Sample v a r i a n c e o f p r o p o r t i o n female across occupations, d i v i d e d by maximum possible variance. E x t e n t o f s e g r e g a t i o n by sex i n occupations, on a scale from 0 ( f u l l y i n t e grated) t o 1 (completely segregated). Estimated c o e f f i c i e n t on p r o p o r t i o n female o f establishment i n t h e wage e q u a t i o n below. Wage p e n a l t y a s s o c i a t e d w i t h increasing proportion female i n an e s t a b l i s h m e n t . The d i f f e r e n c e between an a l l - f e m a l e and an a l l - m a l e establishment. Sample v a r i a n c e o f p r o p o r t i o n female across e s t a b l i s h m e n t s , d i v i d e d by maximum p o s s i b l e variance. Extent o f segregation by sex i n e s t a b l i s h m e n t s , on a scale from 0 ( f u l l y i n t e grated) t o 1 (completely segregated). Estimated c o e f f i c i e n t on p r o p o r t i o n female o f work group i n t h e wage e q u a t i o n below. Wage p e n a l t y a s s o c i a t e d w i t h increasing proportion female i n a work group. The d i f f e r e n c e between an a l l - f e m a l e and an a l l - m a l e work group. Sample v a r i a n c e o f p r o p o r t i on femal e across work groups, d i v i d e d by maximum p o s s i b l e variance. E x t e n t o f s e g r e g a t i o n by sex i n work groups, on a s c a l e from 0 ( f u l l y i n t e grated) t o 1 (completely segregated). Wage e q u a t i o n e s t i m a t e d : w = A + G ' f + B O ' r O+ B e - r e + B W - r W+ e , i i i i I i w i = n a t u r a l l o g o f wage o f i n d i v i d u a l i , A = constant term, f i = 1 i f i n d i v i d u a l i i s female, 0 o t h e r w i s e , r O , r e , r w = p r o p o r t i o n female i n i n d i v i d u a l i ' s o c c u p a t i o n , e s t a b l i s h m e n t , i i and work group, r e s p e c t i v e l y . where Table 2 Summary o f I n d u s t r y Wage Survey Sample C h a r a c t e r i s t i c s M i s c e l 1aneous P l a s t i cs P r o d u c t s ( 1 974) Mean Wage None1e c t r i c a l Machinery (1983) Life Insurance ( 1980) Banki ng ( 1 980) $3.31 $10.20 $6.67 52.5% 61.6% 2.1% 100-249 2,500+ 876 795 221 580 6,198 7,619 4,246 8,028 -. 298 -. 469 -.426 Computer and Data P r o c e s s i ng (1983) $4.73 V a r i a n c e I n (Wage) P e r c e n t Male Percent i n M o s t l y Union P l a n t s Mode E s t a b l ishment S i z e 5,000+ 0.5% 2,500+ Sample S i z e Number o f Occupations Number o f E s t a b l i s h m e n t s Number o f Work Groups Average Number o f Persons p e r Work Group Femal e/Mal e Wage D i f f e r e n t i a1 11.4 - .240 I Source: T a b u l a t i o n s from BLS I n d u s t r y Wage Surveys. Table 3 D e c o m p o s i t i o n o f t h e Female/Male Wage D i f f e r e n t i a l i n Two M a n u f a c t u r i n g I n d u s t r i e s Mi s c e l l aneous P l a s t i c s P r o d u c t s 1 2 C o e f f i c i e n t on P r o p o r t i on Femal e l Extent o f (s.e.) S e a r e a a t i on 2 Labor Market Structure Individual -. 0 16 1 .O None1 e c t r i c a l Machi n e r v 3 Structure C o n t r i b u t i on 3 1 C o e f f i c i e n t on P r o p o r t i on Femal e' .. 2 Extent o f S e g r e a a t i on 2 3 Structure Contri bution3 -.016 ( .003) Occupation - .242 .485 -. 117 .288 -. 029 .761 -. 078 ( .004) Establishment Work Group 4 -.099 ( .004) -. 103 ( .005) T o t a l Observed D i f f e r e n t i a l s - .240 -. 298 C o e f f i c i e n t and s t a n d a r d e r r o r s from an OLS r e g r e s s i o n o f l o g wage on p r o p o r t i o n female i n o c c u p a t i o n , p r o p o r t i o n f e m a l e i n e s t a b l i s h m e n t , p r o p o r t i o n female i n work g r o u p , and an i n d i v i d u a l female dummy. E x t e n t o f s e g r e g a t i o n = (sample v a r i a n c e o f p r o p o r t i o n female among c o n s t i t u e n t s o f l a b o r m a r k e t s t r u c t u r e ) / (maximum p o s s i b l e v a r i a n c e ) . Coefficient ( f r o m column 1 ) m u l t i p l i e d by e x t e n t o f s e g r e g a t i o n ( f r o m column 2 ) . An i n d i v i d u a l ' s work g r o u p i s d e f i n e d as a l l w o r k e r s i n t h e same o c c u p a t i o n a t t h e same establishment. Any d i f f e r e n c e between t h e observed d i f f e r e n t i a l and t h e t o t a l o f t h e c o n t r i b u t i o n s of t h e s t r u c t u r e s i s due t o r o u n d i n g e r r o r . Source: T a b u l a t i o n s f r o m t h e BLS P l a s t i c s and N o n e l e c t r i c a l Machinery I n d u s t r y Wage Surveys. Table 4 Decomposition of the Female/Male Wage D i f f e r e n t i a l in Three Service I n d u s t r i e s Banki no Li f e Insurance 1 2 Coefficient on Proporti ~n Femal e Extent of (s.e.) Seareaati on 2 Labor Market Structure Individual -.013 ( .006) Occupation -.686 .477 Establ i shment -.256 ( .004) .050 Work Group4 -. 195 .596 3 Structure Contri buti on3 1 2 Coefficient on Proporti yn Femal e Extent of (s.e.) Seareaati on 2 Com~uterand Data Processine 3 Structure c o n t r i bution 3 1 2 Coefficient on Proporti on Female' Extent of (s.e.) ~ e a r e a a toin 2 3 Structure Contri buti on3 1 .O (.011) ( .005) R-Square .513 Total Observed Di f f e r e n t i a1 ' ' Coefficient and standard e r r o r s from an OLS regression of log wage on proportion female in occupation, proportion female in establishment, proportion female in work group, and an individual female dummy. * Extent. of segregation = (sample variance of proportion female among c o n s t i t u e n t s of labor market s t r u c t u r e ) / (maximum possible v a r i a n c e ) . C o e f f i c i e n t (from column 1 ) multiplied by extent of segregation (from column 2 ) . An i n d i v i d u a l ' s work group i s defined as a l l workers in t h e same occupation a t t h e same establishment. ' ' ~ d inf f e~r e n c e between t h e observed d i f f e r e n t i a l and the t o t a l of t h e contributions of t h e s t r u c t u r e s i s due t o rounding e r r o r . Source: Tabulations from the BLS Industry Wage Surveys. Table 5 Union E f f e c t s on t h e S t r u c t u r e o f t h e Female/Male Wage D i f f e r e n t i a l i n t h e Miscellaneous P l a s t i c s Products I n d u s t r y Union Establ ishments Nonunion Establishments Labor Market Structure 1 C o e f f i c i e n t on P r o p o r t i on Femal e' (s.e.) 2 Extent of Seareaati on 2 3 Structure C o n t r i b u t i on3 1 C o e f f i c i e n t on P r o p o r t i on Femal e l .. 3 2 Extent of Seareaati on 2 Structure C o n t r ib u t i o n 3 Individual Occupation Establ i shment Work Group4 Total Observed Di f f e r e n t i a1 Percent Female 56.2 48.1 C o e f f i c i e n t and standard e r r o r s from separate union and nonunion OLS regressions o f l o g wage on p r o p o r t i o n female i n occupation, p r o p o r t i o n female i n establishment, p r o p o r t i o n female i n work group, and an i n d i v i d u a l female dummy. E x t e n t of segregation = (sample variance o f p r o p o r t i o n female among c o n s t i t u e n t s o f l a b o r market s t r u c t u r e ) / (maximum p o s s i b l e v a r i a n c e ) . C o e f f i c i e n t (from column 1) mu1 t i p 1 i e d by e x t e n t o f segregation ( f r o m column 2 ) . An i n d i v i d u a l ' s work group i s d e f i n e d as a l l workers i n t h e same occupation a t t h e same establishment. Differences between t h e observed d i f f e r e n t i a l and t h e t o t a l o f t h e c o n t r i b u t i o n s o f t h e s t r u c t u r e s a r e due t o use of industry- wide p r o p o r t i o n female i n occupation r a t h e r than sector- speci f ic estimates. Source: BLS P l a s t i c s I n d u s t r y Wage Survey. Table 6 Union E f f e c t s on t h e S t r u c t u r e o f t h e Female/Male Wage D i f f e r e n t i a l i n t h e N o n e l e c t r i c a l Machinery Industry Nonunion Establ ishments Labor Market Structure 1 Coef f ic i e n t on P r o p o r t i on Femal e ' .. 2 Extent of S e ~ r e a a ton i 2 Union Establishments 3 Structure Contribution3 1 C o e f f i c i e n t on P r o p o r t i on Femal e l .. 2 Extent of Seareaati on 2 3 Structure Contribution3 Individual Occupation Establ ishment -. 152 .444 -.015 (.011) .634 (.010) Work Group4 -. 223 -. 249 Total Observed Di f f e r e n t i a1 Percent Female ' 25.2 -. 302 -. 277 9.4 C o e f f i c i e n t and standard e r r o r s from separate union and nonunion OLS regressions o f l o g wage on p r o p o r t i o n female i n occupation, p r o p o r t i o n female i n establishment, p r o p o r t i o n female i n work group, and an i n d i v i d u a l female dummy. Extent o f segregation possi b l e v a r i a n c e ) . = (sample v a r i a n c e o f p r o p o r t i o n female among c o n s t i t u e n t s o f l a b o r market s t r u c t u r e ) / (maximum C o e f f i c i e n t ( f r o m column 1 ) mu1 t i p 1 i e d by e x t e n t o f segregation ( f r o m column 2 ) . An i n d i v i d u a l ' s work group i s d e f i n e d as a l l workers i n t h e same occupation a t the same establishment. D i f f e r e n c e s between the observed d i f f e r e n t i a l and t h e t o t a l o f t h e c o n t r i b u t i o n s o f the s t r u c t u r e s a r e due t o use of industry- wide p r o p o r t i o n female i n occupation r a t h e r than sector- speci f i c estimates. Source: BLS None1e c t r i c a l Machinery I n d u s t r y Wage Survey. Table 7 Summary of U.S. Pol ic y (Year) Equal O p p o r t u n i t y P o l i c y P r o v i s i o n s Provisions (Description) ' E n f o r c i ng Body Equal Pay A c t (1 963) Equal Pay ( p r o h i b i t s pay i n e q u a l i t y on t h e b a s i s o f sex among workers p e r f o r m i n g equal j o b s i n t h e same e s t a b l i s h m e n t ) Federal Courts T i t l e VII, C i v i 1 Righ.ts A c t (1964) Equal Pay and Equal Employment O p p o r t u n i t y (EEO) ( p r o h i b i t s sex d i s c r i m i n a t i o n Cbv e m ~ l o v e r sw i t h more t h a n 15 employees1 i n u v i r t u a i l y a1 1 aspects of employment: h i r i n g , f i r i n g , t r a i n i n g , promotions, and o t h e r terms and c o n d i t i o n s o f employment) Equal Emp 1oymen t Opportuni t y Commi s s i o n Executive Orders 11246 (1965) and 11376 (1967) Equal Pay, Equal Employment O p p o r t u n i t y (EEO) and A f f i r m a t i v e Action (requires s e t t i n g goals and t i m e t a b l e s t o reduce under-representat i o n o f women i n an f i r m ' s employment p a t t e r n s as a c o n d i t i o n o f r e c e i p t o f f e d e r a l c o n t r a c t s o r subcontracts) Office o f Federal Contract Compl iance Title IX, C i v i l Rights A c t (1975) Equal Education ( p r o h i b i t s sex d i s c r i m i nat i o n i n course o f f e r i n g s , a t h l e t i c a c t i v i t i e s and f a c i l i t i e s , f i n a n c i a l a s s i s t a n c e , c o u n s e l i n g , textbooks, e t c . , i n e d u c a t i o n a l i n s t i t u t i o n s r e c e i v i n g federal funds) Equal Employment Opportunity Commi s s i o n proposed Comparable Worth ( r e q u i r e s equal pay f o r j o b s of comparable v a l u e t o t h e employer . - or worth, i .e.; o f comparable s k i 11, respons i b i l i t y , working c o n d i t i o n s , knowledge, e t c 'Some p r o v i s i o n s o f these a c t s a r e r e p e t i t i v e . a r e i n c l u d e d o n l y once i n t h i s t a b l e . For b r e v i t y , d e s c r i p t i o n s Table 8 R e l a t i o n s h i p Between Equal O p p o r t u n i t y P o l i c y P r o v i s i o n s and Components o f t h e FemaleIMale Wage D i f f e r e n t i a l Pol icy P r o v i s i o n ' t o Reduce Component, Assuming Source i s : Component (Estimated Mean % D i f f l . ' )- Factor (Estimated Mean) Equal E d u c a t i o n Comparable Worth n.a. EEO H i r i n g and Promotion, EEO T r a i n i n g , Affirmative Action Equal Education B e (-.28) none n.a. Se EEO H i r i n g , Affirmative Action n.a. Bw (-.12) Comparable Worth n.a. Sw EEO H i r i n g and Promotion, EEO T r a i n i n g , Affirmative Action n.a. G Occupation Segregation (mfg: -11% svc: -26%) B Establishment Segregation (-6%) Work Group Segregation (-7%) Human C a p i t a l Equal Pay, EEO T r a i n i n g Individual (-1%) O So (-.01> Employer Discrimination (mfg: -.35 svc: -.73) ( .40) (.21) (.61> 4 4 TOTAL WAGE DIFFERENTIAL (mfg: -23%, svc: -36%) n.a.: Not a p p l i c a b l e ; no p o l i c y remedy w i l l a f f e c t t h i s f a c t o r . 'See Table 7 f o r summary o f these p o l i c y p r o v i s i o n s and t h e l e g i s l a t i o n and r e g u l a t i o n s t h a t c o n t a i n them. EEO an acronym f o r Equal Employment O p p o r t u n i t y . This t a b l e l i s t s o n l y s h o r t - r u n e f f e c t s o f these p o l i c i e s ; long- run e f f e c t s a r e v e r y l i k e l y t o be s i z a b l e , b u t a r e d i f f i c u l t t o c l a s s i f y . For i n s t a n c e , EEO promotions presumably enhance t h e s k i l l s of t h e women promoted, i n c r e a s i n g t h e i r human c a p i t a l . 2 Expressed as percentage d e v i a t i o n s f r o m t h e geometric mean wage. 3These f a c t o r s a r e d e f i n e d i n t h e t e x t and i n Table 1. Estimates a r e s i m p l e means f o r t h e values r e p o r t e d i n Tables 3 and 4. G, B , B e and Bw a r e e s t i m a t e d OLS c o e f f i c i e n t s f o r t h e wage e f f e c t s o f i n c r e a s i n g p r o p o r t i o n female. So, Se and Sw a r e measures o f t h e amount o f s e g r e g a t i o n by c o n s t i t u e n t s o f t h e components. O 41f e s t a b l i s h m e n t s o r work groups a r e s o r t e d by qua1i t y o f worker, t h e n Equal Education c o u l d reduce t h i s component. Otherwise, no p o l i c y remedies would a f f e c t t h i s f a c t o r . - 34 - Appendi x Job Classifications Surveyed in Industry Wage ~urvevs' MISCELLANEOUS PLASTICS PRODUCTS (1974) Processing Jobs Blenders Blow-molding-machine operators (set up and operate) Blow-molding-machine operators (operate only) Compression-molding-machine operators (set up and operate) Compression-molding-machine operators (operate only) Extrusion-press operators (set up and operate) Extrusion-press operators (operate only) Finishers, molded plastics products Injection-molding-machine operators (set up and operate) Injection-molding-machine operators (operate only) Laminating-press operators Mandrel men Plastics cutters, machine Preform-machine operators Scrap-preparing operators Setup 161 162 163 164 165 166 170 180 190 Men, Plastic-Molding Machines Blow-mol di ng machines Compression-molding machines Extrusion presses Injection-molding machines Vacuum-plastics-forming machines Other (including combination of above) Tumbler operators Vacuum-plastics-forming-machine operators (set up and operate) Vacuum-plastics-forming-machine operators (operate only) Maintenance Jobs 200 210 220 230 240 250 260 270 Electricians, maintenance He1 pers, trades, maintenance Machine-tool operators, toolroom Machinists, maintenance Maintenance men, general uti 1 i ty Mechanics, maintenance Pipefitters, maintenance Tool and die makers 'SOURCE: U.S. Department of Labor, Bureau of Labor Statistics, Division of Occupational Wage Structures. PLASTICS, c o n t i n u e d Miscellaneous Jobs 310 320 330 340 350 360 370 I n s p e c t o r s , molded p r o d u c t s Jan it o r s Laborers, m a t e r i a l h a n d l i n g Packers, s h i p p i n g Recei v i ng c l e r k s Shipping c l e r k s S h i p p i n g and r e c e i v i n g c l e r k s Truckers, Power 381 Forklift 382 Other t h a n f o r k l i f t 390 Hatchmen 2. NONELECTRICAL MACHINERY (1983) Machine-Tool Operator, P r o d u c t i o n Automatic- Lathe Operator 5111 C l a s s A 5112 Class B 5113 Class C 5114 NIC, s e t up and operate 5115 NIC, o p e r a t e o n l y D r i l l - P r e s s Operator, Radial 5121 Class A 5122 Class B 5123 Class C 5124 NIC, s e t up and operate 5125 NIC, o p e r a t e o n l y D r i 11-Press Operator, S i n g l e - o r Mu1t i p l e - S p i n d l e 5131 Class A 5132 Class B 5133 Class C 5134 NIC, s e t up and operate 5135 NIC, o p e r a t e o n l y Engine- Lathe Operator 5141 Class A 5142 Class B 5143 Class C 5144 NIC, s e t up and operate 5145 NIC, o p e r a t e o n l y Grinding- Machine Operator 5151 Class A 5152 Class B 5153 Class C 5154 NIC, s e t up and operate 5155 NIC, o p e r a t e o n l y MACHINERY, continued Machi ne- Tool Operator, M i s c e l 1aneous 5161 Class A 5162 Class B 5163 Class C 5164 NIC, s e t up and o p e r a t e 5165 NIC, operate o n l y M i l l i n g - M a c h i n e Operator 5171 Class A 5172 C l a s s B 5173 Class C 5174 NIC, s e t up and o p e r a t e 5175 NIC, operate o n l y Screw-Machine Operator, Automatic 5181 Class A 5182 Class B 5183 Class C 5184 NIC, s e t up and o p e r a t e 5185 NIC, operate o n l y Turret - Lathe Operator, Hand 5191 Class A 5192 Class B 5193 Class C 5194 NIC, s e t up and o p e r a t e 5195 NIC, operate o n l y Other Jobs Set-Up Worker, Machine Tools 5201 Conventional machi nes 5202 NIC machines Punch-Press Operator 5211 Class A 5212 Class B Assembler 5221 C l a s s A 5222 C l a s s B 5223 Class C 5230 5240 P o l i s h e r and b u f f e r , metal P o l i s h i n g - and buffing- machine o p e r a t o r Welder, Hand 5251 Class A 5252 Class B Welder, Machine 5261 Class A 5262 Class B MACHINERY, c o n t i nued Tool and D i e Maker 5271 Tool and d i e maker ( j o b b i n g ) 5272 Tool and d i e maker ( o t h e r t h a n j o b b i n g ) Inspector 5281 C l a s s A 5282 C l a s s B 5283 C l a s s C 5290 Tool c l e r k 3070 M a c h i n i s t , maintenance 5330 M a c h i n i s t , p r o d u c t i o n 3100 Mechanic, maintenance 3010 C a r p e n t e r , maintenance 3020 E l e c t r i c i a n , maintenance 4030 J a n i t o r , p o r t e r , o r c l e a n e r 4070 L a b o r e r , m a t e r i a l h a n d l i n g ' Machine- Tool O p e r a t o r , T o o l r o o m (Operates O n l y One Type o f Machine T o o l ) 3061 D r i l l - p r e s s o p e r a t o r , r a d i a l 3062 E n g i n e - l a t h e o p e r a t o r 3063 Grinding- machine o p e r a t o r 3064 M i l l i n g - m a c h i n e o p e r a t o r 3065 O t h e r ( n o t s p e c i f i e d ) t o o l r o o m machine 3068 Operates more t h a n one t y p e o f machine t o o l 3. L I F E INSURANCE CARRIERS (1979) Selected Insurance Occupations Actuaries 101 Class A 102 ClassB Cl a i m Approvers 201 202 Class A Class B 300 310 Clerks, p o l i c y evaluation C l e r k s , premium- ledger- card Correspondents 321 ClassA 322 Class B 330 Premi um a c c e p t o r s Underwriters 401 Class A 402 ClassB INSURANCE, continued Selected General Clerical Occupations Clerks, Accounting 501 Class A 502 Class B 503 Not classifiable by level Clerks, File 511 ClassA 512 Class B 513 Class C 514 Not classifiable by level Key Entry Operators 521 ClassA 522 Class B 523 Not classifiable by level . Secretaries 531 ClassA 532 Class B 533 Class C 534 Class D 535 Class E 536 Not classifiable by level Stenographers 541 General 542 Senior 543 Not classifiable by level Switchboard Operators 551 Class A 552 Class B 560 Transcribing-machine typists Typists 571 Class A 572 Class B 573 Not classifiable by level Selected Computer Occupations Computer Operators 601 Class A 602 ClassB 603 Class C 604 Not classifiable by level INSURANCE, c o n t i n u e d Computer Programmers, B u s i n e s s 611 ClassA 612 Class B 613 Class C Not c l a s s i f i a b l e b y l e v e l 614 Computer Systems A n a l y s t s , B u s i n e s s 621 ClassA 622 Class B 623 Class C Not c l a s s i f i a b l e b y l e v e l 624 630 4. D a t a 1i b r a r i a n s BANKING (1979) S e l e c t e d General C l e r -i c a l O c c u p a t i o n s Bookkeeping- Machine O p e r a t o r s 1010 C l a s s A 1020 C l a s s B Clerks, F i l e 1030 C l a s s A 1040 C l a s s B 1050 C l a s s C 1053 Not c l a s s i f i a b l e b y l e v e l Clerks, Accounting 1055- C l a s s A 1056 C l a s s B 1057 N o t c l a s s i f i a b l e b y l e v e l Key E n t r y O p e r a t o r s 1060 C l a s s A 1070 C l a s s B 1075 N o t c l a s s i f i a b l e b y l e v e l Secretaries 1101 C l a s s A 1102 C l a s s B 1103 C l a s s C 1104 C l a s s D 1105 C l a s s E 1106 N o t c l a s s i f i a b l e b y l e v e l Stenographers 1110 General 1120 S e n i o r 1125 N o t c l a s s i f i a b l e b y l e v e l BANKING, continued Switchboard Operators 1130 Class A 1140 Class B Typists 1150 Class A 1160 Class B 1165 Not classifiable by level Selected Computer Occupations Computer Operators 2010 Class A 2020 Class B 2030 Class C 2035 Not classifiable by level Computer Programmers, Business 2040 Class A 2050 Class B 2060 Class C 2065 Not classifiable by level Computer Systems Analysts, Business 2070 Class A 2080 Class B 2090 Class C 2095 Not classifiable by level Selected Banki ng Occupations 1080 Proof-machine operators 1090 Safe-deposit-rental clerks Tel lers 3010 Note 3020 Commercial-savings (paying and receiving) 3030 Commercial 3040 Savings 3050 All-round Loan 4010 4011 4012 4013 Officers Personal credi t Commercial loans Mortgage Not classifiable by type of loan 5. COMPUTER AND DATA PROCESSING SERVICES Computer O p e r a t o r s 101 Level I 102 Level I 1 103 LevelIII 104 Level I V 105 Level V 106 Level V I 110 Data L i b r a r i a n s Electronics Technicians 121 LevelI 122 LevelII 123 Level I11 Key E n t r y O p e r a t o r s 131 Level I 132 Level I 1 140 P e r i p h e r a l Equipment O p e r a t o r s ProgrammerIProgrammer A n a l y s t s 151 Level I 152 LevelII LevelIII 153 154 Level I V 155 Level V Systems A n a l y s t s 161 Level I 162 Level I 1 163 Level I11 Systems Programmers LevelI 171 172 LevelII 173 L e v e l I11 174 Level I V (1982)
@FedFRASER