On the Measurement of Wage Mobility and its Decomposition

This paper investigates the relation between advances in technology and trends in the gender wage gaps in the US service industry. Using quarterly US Current Population Survey data on employment and wages by four major occupations between 1979 and 2001, the paper estimates a constant elasticity of substitution production function (CES) that incorporates male and female labor inputs, a non-labor input and a productivity parameter function that captures non-neutral technological change. The model is estimated by two stage least squares (2SLS) with cross-equation restrictions. The results reveal a narrowing effect of technological change on the female-male wages for the highest skill level occupation (managerial, professional occupations). This effect is robust to controlling for the unexplained gender wage gap and to using direct measures of technological change. The effect of technological change on the gender wage gaps for the other skill levels tends to diminish or disappear altogether once changes in unexplained gender wage gaps are adjusted for. The results highlight the importance of considering the unexplained gender wage gaps in examining the effect of technological change on the gender wage gaps.