What Do Wage Differentials Tell Us About Labor Market Discrimination?

59 Pages Posted: 12 May 2005 Last revised: 3 Apr 2022

See all articles by June O'Neill

June O'Neill

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance; National Bureau of Economic Research (NBER)

Dave M. O'Neill

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance

Date Written: April 2005

Abstract

We examine the extent to which non-discriminatory factors can explain observed wage gaps between racial and ethnic minorities and whites, and between women and men. In general we find that differences in productivity-related factors account for most of the between group wage differences in the year 2000. Determinants of wage gaps differ by group. Differences in schooling and in skills developed in the home and in school, as measured by test scores, are of central importance in explaining black/white and Hispanic/white wage gaps among both women and men. Immigrant assimilation is an additional factor for Asians and workers from Central and South America. The sources of the gender gap are quite different, however. Gender differences in schooling and cognitive skills as measured by the AFQT are quite small and explain little of the pay gap. Instead the gender gap largely stems from choices made by women and men concerning the amount of time and energy devoted to a career, as reflected in years of work experience, utilization of part-time work, and other workplace and job characteristics.

Suggested Citation

O'Neill, June and O'Neill, Dave M., What Do Wage Differentials Tell Us About Labor Market Discrimination? (April 2005). NBER Working Paper No. w11240, Available at SSRN: https://ssrn.com/abstract=697165

June O'Neill (Contact Author)

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance ( email )

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New York, NY 10010
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National Bureau of Economic Research (NBER)

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Dave M. O'Neill

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance ( email )

17 Lexington Avenue
New York, NY 10010
United States