Why Has the Gender Wage Gap Narrowed?

The decreased use of motor skills and the increased use of cognitive skills in the workplace help explain the narrowing wage gap between men and women from 1979-1996.

McMaster Researcher

Citation

Yamaguchi, S. Changes in Returns to Task-Specific Skills and Gender Wage Gap. SSRN Electronic Journal. doi:10.2139/ssrn.2035833

What is this research about?

The gender wage gap decreased dramatically after the 1980s.  The purpose of this research is to provide a comprehensive explanation for this observation. A model is developed to quantitatively evaluate the effects of the technological change, which was induced by the broad adoption of computers in the workplace, on the gender wage gap.

What did the researchers do?

The researcher from McMaster University used data from the Dictionary of Occupational Titles and the Panel Study of Income Dynamics to describe the state of the U.S. labour market in 1979 to 1996. The researcher then developed a theoretical framework to understand the mechanisms behind how workers are assigned to tasks and how their wages are determined. The author later used a mathematical model to estimate the wage equation and skill measurements, such as motor and cognitive skills measurements, of workers from that time period. He finally compared his findings to those from previous findings.

What did the researchers find?

The researcher found that:

  • During the periods of 1979-1996, men had substantially more motor skills than women. However, there was only a small difference in cognitive skills between genders.
  • There was decreased use of motor skills and the increased use of cognitive skills in the workplace during this period of time as workers switched to more cognitive-task intensive jobs. About 60% of the decrease in the gender wage gap is due to this declining returns to motor skills.
  • During this period, women became more educated, experienced, and undertook more complex cognitive tasks. The faster increase in women's cognitive skills compared to men also helped narrow the gender wage gap.

How can you use this research?

The findings from this article are useful for policy analysis in areas such as, for example, Employment and Social Development Canada (ESDC) or Status of Women Canada.  It is also helpful to better understand the influence of technology in the labour market. We now have more insight into the reasons why individuals choose certain jobs and why wages are distributed in a particular way in the labour market.

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