Sex Differences in Earnings in The United States

Abstract

This paper reviews the current state of knowledge on sex differences in earnings in the United States. The paper has three sections. The first describes the phenomenon under consideration, reviewing what is known about the size of the wage gap, historical and life course variations in the wage gap, and race differences in the wage gap. The second section, which constitutes most of the paper, reviews explanatory theories advanced to account for the wage gap and the empirical evidence relevant to their evaluation. This section is divided into two principle parts. The first considers “supply-side” explanations that focus on the characteristics and decisions of individual workers. These include the human capital theory of economics and alternative views offered by sociologists and social psychologists that focus on processes of socialization and allocation and the operation of social networks. All of these explanations attribute the sex gap in earnings to differences in the qualifications, intentions, and attitudes that women and men bring to the labor market, including the social ties that influence worker-job matches. The second part of the section considers “demand side” explanations that focus on characteristics of the workplace and actors within it. These explanations include theories of discrimination in the labor market developed primarily by economists and social psychologists and ideas about the evolution and persistence of a discriminatory wage structure put forward by institutional economists and sociologists. The final section suggests directions for future work.