Millennials and the Gender Wage Gap in the U.S.: A Cross-Cohort Comparison of Young Workers Born in the 1960s and the 1980s

By Roche, Kristen | Atlantic Economic Journal, September 2017 | Go to article overview

Millennials and the Gender Wage Gap in the U.S.: A Cross-Cohort Comparison of Young Workers Born in the 1960s and the 1980s


Roche, Kristen, Atlantic Economic Journal


Introduction

Research on the gender wage gap in the U.S. finds that despite substantial gains in women's earnings since the late 1970s, convergence slowed in the 1990s and early 2000s and continues to persist today. However, data from the 2011 American Community Survey indicate that women are increasingly becoming the sole or primary earner in American households and nearly a quarter of married women now earn more than their husbands, compared to 6% of married women in the 1960s (Wang et al. 2013). Overall, this shift is likely due to several factors including gender differences in employment during and after the Great Recession, changing family dynamics, and a rise in single-mother households.

How does the economic literature on the gender wage gap reconcile with these post-Great Recession trends? The majority of current research investigates the gender wage gap up until the 1990s and we know little of the early millennial generation experience, that is, young workers born in the 1980s. As social and labor market norms progress toward gender equality, we might expect female millennials to be different from young females of past generations. These differences, both measurable and unmeasurable, have likely impacted the female wage penalty. On average, millennials experienced different childhoods as it was more common for them to grow up in households with working mothers as well as fathers contributing relatively more to child-rearing and household production. Female millennials are relatively more educated, were exposed to a greater variety of career opportunities, and likely entered careers with more progressive norms toward working women (Wang et al. 2013). On average, they are also more likely to delay marriage and fertility in their early years of work experience (Taylor et al. 2011).

This paper compares young workers in two single-cohort longitudinal surveys, the NLSY79 and NLSY97, to investigate gender inequality among millennials in the current labor market. The earlier cohort is comprised of individuals born in the early 1960s, and the later cohort includes individuals born in the early 1980s. Given that labor market entrants have historically driven much of the gender wage gap convergence (Blau and Kahn 2007), the current study focuses on young workers rather than a representative sample of workers of all ages.

Unadjusted descriptive statistics depict moderate cross-cohort improvement in gender equality. For example, the gender log wage differential closes 2.4 log points at the mean and 3.5 log points at the median. In addition, the mean female percentile in the male wage distribution moved up four percentile points between cohorts. Indeed, 58% of male millennials out-earned female millennials, compared to 62% of young males 20 years prior.

This paper estimates temporal changes in the gender wage gap and its determinants to explore how and why the wage gap may have shifted across cohorts. The findings indicate that in 20 years, when controlling for the standard gender wage gap specification variables, the gap among young workers closed four percentage points at the mean and seven percentage points at the median. Estimates from quantile regression suggest that the female penalty increases across the wage distribution, and the shape of the distribution is nearly identical between cohorts. By comparing the determinants of wages by cohort and estimating cross-cohort temporal change, it suggests there are notable differences in family and job characteristics between the cohorts. Female millennials earn marriage premiums that are similar to the male experience of both cohorts. In terms of job characteristics, female millennials make a considerable improvement in the return to self-employment and are subject to a more favorable occupational wage structure. Moreover, cross-cohort changes in human capital contribute very little to convergence.

A Juhn et al. (1993) decomposition confirms a similar story of moderate convergence among young workers, although only 17% of it can be explained by changes in measured characteristics and prices. …

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