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Pay Equity Empirical Inquiries (1989) / Chapter Skim
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10. Women's Pay in Australia, Great Britain, and the United States: The Role of Law, Regulations and Human Capital
Pages 222-246

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From page 222...
... In Britain and the Uniter] States the female earnings ratios were about 64 an(1 60 percent, respectively.
From page 223...
... The most common earnings equations adopt a human capital framework an(l hypothesize that the differences in the earnings of men and women can be explainer! primarily in terms of differences in human capital, as measure(1 by years of schooling, work experience, marital status, and so on (Mincer, 1974; Oaxaca, 19731.
From page 224...
... In Australia the earnings gap is very small. The human capital approach for explaining the female earnings ratio within a country may also be used to explain differences across countries (Gregory and Ho, 1985~.
From page 225...
... . For example, if the hypothetical British earnings ratio and the Australian earnings ratio were equal, then we would know, on the basis of the Australian coefficients, that the cross country earnings gap cannot be explained by the different relative endow225 meets of men and women in each country.
From page 226...
... As inclicated earlier, other studies suggest that the human capital model, on average, can explain only about half of the pay gap within each country. We now turn to an investigation of the 3There are some differences in labor force participation rates for women across the countries, and a more extensive study would attempt to take those differences into account, especially because they may affect the gaps between potential and actual experience.
From page 227...
... Our second major conclusion is that the simple human capital model, as usually specified, cannot explain the difference in earnings ratios across countries. Only a small fraction of the earnings gap between Australia, on the one han(l, and the Unite States and Britain, on the other, can be explained by different endowments of human capital.
From page 228...
... (.0114) Urban Marital Status Spouse present 0.1577 0.2128 0.1734 (.0106)
From page 229...
... From 1950 to 1969 the markdown in pay for a female occupation was usually to 75 percent of the notional male wage for each occupation. Because women work fewer hours an(1 are disproportionately represented in low-paying occupations and because men often earn significantly more than the minimum rates of pay, the 75 percent rate procluce(1 an aggregate weekly earnings ratio of full-time workers of about 60 percent.
From page 230...
... In 1974, the federal tribunal decided to extend the male minimum wage to females, an(1 this reinforced the substantial pay increase for low-paid women on the bottom of the pay scales in female occupations. As a result, a substantial pay increase for all women was ensured no matter what the outcome of the "equal pay for work of equal value" decision in each individual instance.
From page 231...
... This is a position that is at least consistent with the results of the earlier section, which indicate that the difference between the pay relativities across countries relates to differences in coefficients and not differences in human capital endowments. Second, given that labor market institutions have been so important in changing the pay relativities in Australia, what has been the role of labor market institutions in Britain an(l the United States?
From page 232...
... In the Unitecl States, if the Equal Pay Act hail any effect at all, it is likely that it changed the female earnings ratio in aggregate by considerably less than 5 percent. Why then was the British Equal Pay Act, which di(1 not require comparable worth or equal pay for work of equal value, so effective?
From page 233...
... Second, in each country the pay changes occurred so quickly in response to official interventions that it is clear that the human capital framework is not useful in explaining chances in the earnings ratios in the two countries. For the work force as a whole human capital attributes change very slowly and therefore player!
From page 235...
... In Table 10-5 we present female earnings in male and female occupations expressed as a ratio of average male earnings. In each country, the few women who work in male occupations are better paid than other women, but the ranking of the earnings ratios in male occupations across the countries
From page 236...
... 236 _ X _ _ V, Cal Cal .
From page 237...
... EMPLOYMENT AND UNEMPLOYMENT The sudden and dramatic change in the female earnings ratio in Britain and Australia was not reflected in a sudden and dramatic change in relative employment growth. The ratio of total hours worked in the labor market by women to the total hours worked by men is given in Figure 10-2 for the three countries.
From page 238...
... Within a human capital framework the variation in the pay gap among these countries stems from differences in coefficients rather than from differences in enclowments. Second, between 1969 anti 1976 the ratio of female to male pay increased about 30
From page 239...
... cannot explain these large pay changes, which flowed from official intervention in the labor markets. The pay changes followed two clecades of relative constancy.
From page 240...
... 1973 Male female wage differentials in urban labor markets. International Economic Review 14 (October)
From page 241...
... Postgraduate higher degree level. Experience Age minus years of schooling minus six.
From page 242...
... E xper~ence Age minus years of schooling minus six.
From page 243...
... First, why do female relative wages slider across countries in the early 1980s—do the differences reflect clifferences in relative (female/maTe) human capital endowments or differences in labor market institutions across countries?
From page 244...
... Thus, they conclude that most of the clifference in female relative wages across the three countries is due to differences in the wage structures (coefficients of the wage equations) ; human capital differences are relatively unimportant.
From page 245...
... Consider, first, the analyses of the determinants of intercountry differences in the female relative wage differentials. Although the authors, probably justifiably, conclude that the differences are due to cliffering coefficients of wage equations across countries, not to differences in human capital endowments, they do not attempt to explain why the coefficients found in Table 10-1 might (lifter across countries.
From page 246...
... labor force behavior. Ignoring my concerns about the nature of their empirical evidence, I take away a message from this paper that is a simple but important one: It is likely to be much easier to improve the female relative wage rate by a comparable-worth-type policy in a world in which wages are set centrally and discrimination is overt than it is in a (decentralized market economy in which we still argue over whether labor market discrimination occurs.


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