Disentangling Occupational Sorting from Within-Occupation Disparities: Earnings Differences Among 12 Gender–Race/Ethnicity Groups in the U.S.

Abstract

AbstractThis paper quantifies the role that occupations play in explaining wage differences among 12 gender–race/ethnicity groups without including occupations as control variables in wage equations. Our approach, based on a counterfactual analysis that involves a re-weighting scheme, has three advantages. First, it allows enlarging the small list of occupations usually employed in the literature. Second, it directly addresses the fact that occupational sorting is not a gender- and race-blind mechanism. Third, it allows for the comparison of all the groups simultaneously after controlling for characteristics. Our analysis shows that, after controlling for characteristics other than gender and race/ethnicity, occupational segregation accounts for around 40–50% of the earnings losses of White, Hispanic, Native American, and “other race” women (relative to the economy’s average wage) and it reaches 63% in the case of Black women. Black men’s occupational sorting also harms them after controlling for attributes, a finding that we do not see in any other male group. On the contrary, around half of the earnings advantages of White and Asian men arises from their occupational sorting. Additionally, this paper develops a decomposition that allows identifying the occupations that bring losses/gains to each group beyond what is expected based on its characteristics, which is also a novelty in respect to what has been done in the literature.