Towards a broader explanation of male-female wage differences

Abstract

Most analyses of wage discrimination have followed the traditional Blinder-Oaxaca decomposition of wage differences into endowment and discrimination components. This approach has neglected the possibility of wage discrimination at point of entry to the labour market and also the issue of selectivity bias. Using some recently developed techniques of Neumann and Oaxaca this paper decomposes male-female wage differences taking account of discrimination in terms of access to the labour market and also selectivity bias. It finds considerable evidence of discrimination at point of entry but that discrimination owing to selectivity bias is minimal.