Revisiting the Gender Wage Gap in the United States

Abstract

In this paper, we revisit the gender wage inequality in the United States with a focus on the deciles level wage-distribution in the USA during 1986 to 2016. We find that with the inclusion of part time employed men and women, the overall ratio of women’s to men’s wages in 1986 was 53 percent and this ratio increased to 67 percent as of 2016, suggesting a very moderate decline in overall gender wage gap over three decades. Moreover, our study decomposes the trends of the gender wage gap by the deciles and provides a description of the trends at the decile level for the recent years. We find that a higher gender unemployment gap has been associated with lower gender wage gap. Moreover, although the wage gap has declined moderately, within each gender, the wage-income share of the bottom decile to the top decile has dropped (and Coefficient of Variation has gone up), with a higher magnitude for women, suggesting an increase in wage inequality within each gender with a higher intensity for women. Finally, we demonstrate that traditional economic “reasons” for the gender wage gap–part time jobs and lack of skill–fail to explain the current gap convincingly, indicating an implicit gender discrimination.

Keywords: Gender wage gap, Big mac index, Inequality, Wage distribution decile, Comparative country studies

JEL Classification: J710, O57