Gender Gaps in Wages and Employment: The Role of Employers’ Prejudice

This chapter develops a structural model to separate the part of the wage difference between men and women in the US labor market that is due to productivity and the part that is due to prejudice and/or discrimination. It uses very detailed data on US employer and employees to estimate the model. Interestingly,it finds that for all education groups prejudice explains a substantial part of the gender gap,although that gap decreased between 1995 and 2005. As of 2005 the major gender differential in wages is explained by differences in productivity,except for the group of Masters and PhDs in which,surprisingly,prejudice plays a larger role in 2005 than earlier.