FEMALE-MALE EARNINGS DIFFERENTIALS AND OCCUPATIONAL STRUCTURE

This paper reviews the econometric literature on female-male wage differentials around the world, with special emphasis on the role played by the asymmetric distribution of men and women across occupations. Studies of the extent to which these differentials arise from differences in human capital (primarily education and experience) vs. differences in returns to human capital (a measure of labour market discrimination) have shown that the latter explain far more of the wage gap virtually everywhere. It has further been shown that men's and women's occupational structures are very important in explaining the earnings gap, since the crowding of women into a few occupations tends to depress wages there. Public policy therefore needs to be based on an understanding of the supply and demand factors behind the crowding phenomenon.