Wage Gaps and Demographic Behavior

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Wage Gaps and Demographic Behavior *Works Cited Not Included We examine the possible sources of the larger racial and ethnic wage gaps for men than for women in the U.S. Specifically, using a newly created employer-employee matched data set containing workers in essentially all occupations, industries, and regions, we examine whether these wage differences can be accounted for by differences between men and women in the patterns of racial and ethnic segregation within occupation, industry, establishments and occupation-establishment cells. To the best of our knowledge, this is the first paper to examine segregation by race and ethnicity at the level of establishment and job cell. Our results indicate that greater segregation between Hispanic men and white men than between Hispanic women and white women accounts for essentially all of the higher Hispanic-white wage gap for men. In addition, our estimates indicate that greater segregation between black and white men than between black and white women accounts for a sizable share (one-third to one-half) of the higher black-white wage gap for men. Our results imply that segregation is an important contributor to the lower wages paid to black and Hispanic men than to white men with similar individual characteristics. Our results also suggest that equal pay types of laws may offer some scope for reducing the black-white wage differential for men, but little scope for reducing the Hispanic-white wage differential for men. I. Introduction Labor economists have long been occupied with explorations of the sources of wage differences by sex, race, and ethnicity. It is well known that wages earned by minorities and by females fall short of wages earned by white males, after accounting... ... middle of paper ... ...u divides the country into a hierarchy of geographic areas. For our purposes the relevant areas are state, county, place, tract, and block. The Census Bureau assigns a unique code to every state in the country. Within each state the Census Bureau assigns a unique code to every county. The Census Bureau also assigns a unique place code to population centers with 2,500 or more people. Because these population centers are unique within a state, but can cross county boundaries, we can distinguish between areas in the same place located in different counties. Finally, the Census Bureau divides up populated counties into unique tracts and divides tracts up into unique blocks.(7) Thus, for an establishment located in a metropolitan area, the Census Bureau assigns a unique geographic code which identifies the state, county, place, tract, and block of the establishment.

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