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

Abstract

Using two cohorts of young workers born in the early 1960s and early 1980s, this paper analyzes the temporal change in the U.S. gender wage gap and its determinants, which persists for both explained and unexplained reasons. Results suggest that the gender wage gap closed four (seven) percentage points at the mean (median) between cohorts. It finds cross-cohort evidence that young females’ increasing returns to marriage and a changing occupational wage structure contributed to a narrowing of the gap. Nonetheless, the majority of this convergence remains unexplained due to relative improvements in unobservable institutional factors or heterogeneity for females. Compared to the previous generation, millennials likely entered a more progressive, female-friendly labor market. It is also possible that female millennials are more ambitious and competitive in their early years of work experience relative to females born in the 1960s.

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Notes

  1. 1.

    Retention is critical to the validity of longitudinal data sets. Until 1991, the NLSY79 retention rate was 90.9%, and up to 2011, the NLSY97 retention rate was 84.1%. While attrition likely reduces the precision of this paper’s results, it could also bias the results if attrition is non-random.

  2. 2.

    The National Longitudinal Surveys suggest that researchers do not use sample weights when implementing regression analysis on longitudinal data, and thus descriptive statistics and results are constructed using unweighted data.

  3. 3.

    Of course, it is also possible that a larger percentage of this cohort will choose not to marry or not have children, but this statistic cannot be accurately measured at this early point in the individual’s lifecycle.

  4. 4.

    A similar methodology is used by Avellar and Smock (2003) to compare the motherhood wage penalty across two birth cohorts.

  5. 5.

    For all fixed effects models, the Hausman test indicates a need for a fixed effects model versus a random effects model.

  6. 6.

    Although the JMP decomposition method is widely used in the wage inequality literature, it is not without shortcomings. These papers, along with Datta Gupta et al. (2006) and Lemieux (2006), describe some of the issues surrounding the technique.

  7. 7.

    Previous research finds that the motherhood penalty decreases with delayed fertility (Buckles 2008; Miller 2011). Thus, the coefficient on the number of children in the female-only models is likely overestimated compared to other analyses that measure the motherhood penalty using a sample of women who have reached the end of their child-bearing age.

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Correspondence to Kristen Roche.

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Roche, K. Millennials and the Gender Wage Gap in the U.S.: A Cross-Cohort Comparison of Young Workers Born in the 1960s and the 1980s. Atl Econ J 45, 333–350 (2017). https://doi.org/10.1007/s11293-017-9546-6

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Keywords

  • U.S. gender wage gap
  • Millennials

JEL

  • J01
  • J16
  • J31