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Job turnover can't explain malefemale wage gap, economist finds
Young women with more than a high school education do not leave jobs more often than young men, as is often suggested, and yet their wages are only about 85 percent of the wages of men with comparable education, according to a new study probing the reasons for the wage gap between American men and women.
The study undermines the often suggested reason that women get lower wages because they drop out of the labor force more often.
Women with a high school education or less do leave the labor force more often than men or than more highly educated women, said Anne Royalty, an assistant professor of economics who conducted the study, which was recently published in the Journal of Labor Economics. The less highly educated women earn about 78 percent of men with comparable education.
Lower labor force participation might explain part of the larger pay gap for less educated women, Royalty said, but quitting paid employment doesn't seem to explain the gap for more educated women.
"One big controversy in labor economics has been, Is the wage gap caused by employer discrimination against women or not?" she said. Since economists can't gather statistics directly on discrimination in labor markets, they look for other observable factors that may help answer the question.
"Most of the theories that try to explain why there might justifiably be a wage gap have something to do with job turnover," Royalty said. "Either women are paid less because they know they are not going to be in the labor force as long so they don't invest in the kind of human capital that would pay off in the labor market, or their employers know they are not planning to stay on the job as long, so they don't give them as much training or put them in jobs that have less potential for growth."
These theories are based on gender differences observed over time in labor statistics: Women have traditionally had lower paid-labor-force participation rates and higher job turnover rates than men, she said. "But women are far more likely to be in the workforce today than they were two decades ago, so I decided we should look at those again with newer data to see if the patterns were still holding."
Using data from the National Longitudinal Survey of Youth, Royalty looked at the job turnover of men and women from ages 22 to 30 in the 1980s. She looked deeper than past researchers and disaggregated job turnover into two types workers who left jobs for another job, and those who left for a period of unemployment, either because they were laid off or quit. She also looked for differences by education level because labor data already indicated that women with more education have greater labor force participation than lesser educated women.
Disaggregating the data into educational groups and job turnover categories proves to be critical to understanding women's job turnover, she said. "When you put all women together, yes, it looks like women leave the labor market more and go from jobs to nonemployment more, but in fact, it is the less educated women who are doing that and the more educated women look just like men."
Specifically, she found that at every age studied, the less educated women were more likely by at least 5 percentage points than the other groups to leave a job for non-employment. Their job-to-job turnover, however, was less than the other groups.
The more educated women were no more likely than men to leave jobs for nonemployment, and they were slightly more likely than men to stay in a job than to change to a new job, she said. Their job-to-job turnover was about 1 to 2 percentage points less than for men.
The study is not sufficient to prove that the wage gap for educated women is mostly attributable to employer gender discrimination, she said, although that is a clearer possibility. "There is definitely evidence against higher turnover being the root cause of the wage gap for more highly educated workers, at least at these younger ages," she said.
Royalty was asked how her study fit with the conclusions of a Stanford committee in 1993 that investigated the wage gap between faculty men and women. Both men and women faculty members told the committee that in order to get a large merit raise, they had to play the "offers game" attracting offers from other institutions that Stanford would then match. The committee reported that faculty members with spouses found it particularly difficult to seek job offers elsewhere, and the committee said the pattern had a disproportionate adverse effect on the salaries of women faculty.
The people in Royalty's study were younger than most tenure-line faculty, she said, and the academic job market may be quite atypical of job markets in general. "There are not a lot of job opportunities [for faculty] in the same geographic area, so moving tends to be a bigger deal," she said, than for people in many types of jobs. "I think the thing to take away from this study is that, on average, more educated women are not really behaving differently from men."
In the past, most labor economics studies that modeled the family assumed women were the secondary wage earner, Royalty said. "You took the man's income, and asked, Will the woman work? That depends, you said, on how much her husband makes. That was the primary thing going on. Now, we take it that people make these decisions more jointly, their opportunities are more equal and their expectations are more equal. With the lesser educated women, however, you may see some of those earlier patterns still coming into play."
Royalty was asked how these models fit with her own experience or that of observing others at Stanford. She is married to Bob Royalty, a teaching fellow in Stanford's Introduction to Humanities program, and they have a 2-year-old daughter and a 7-year-old son, whom they are raising on campus while serving as resident fellows in Florence Moore Hall.
"I see people trying lots of different paths in order to balance work and family," she said. "I think that is one of the biggest unresolved issues of having so many women in the labor market.
"I committed to one particular path. I had children later than people used to but earlier than many academic women who might have tried to wait until they had tenure. I see other people trying different paths simultaneously, and graduate students talk to me about it. They ask, 'Does this work? How about that?' I say to them, 'Here are the pros and cons.' We have come to a point where people can do this in different ways, and maybe that is the only resolution we will have."