College students are narrowing the gender wage gap

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Howard R. Gold | Jan 23, 2020

Sections Economics

Collections Gender Gap

Starting with the group of Americans born in the 1950s, women in the United States have overtaken men in terms of how many complete college. However, college-educated women still trail their male peers in compensation, even though it has been nearly 50 years since women entered the workforce en masse and despite their strong and persistent upskilling. One potential explanation: many women specialize in lower-pay fields, such as elementary education, both in the college classroom and in the labor market.

According to research by University of California at Riverside’s Carolyn Sloane, Chicago Booth’s Erik Hurst, and University of Chicago Harris School of Public Policy’s Dan Black, this has started to change. Their study documents that more recent generations of college women are sorting into traditionally male-dominated majors. For example, for baby boomers born between 1950 and 1954, only one woman majored in engineering for every 20 men. For millennials born 40 years later, the ratio changed to one woman for every 5 men. This trend is also recorded in the physical and life sciences. Among biology majors, women outnumber men.

In traditionally female-dominated subjects such as nursing, foreign languages, and fine arts, there has also been gender convergence. However, in the case of business, a traditionally male-dominated major, the converging trend lasted until only the 1965 birth cohort, when it started to diverge again. 

Beyond studying movements in college-major choices, the researchers wanted to examine the wage effects of these decisions. Until recently, research on the cost of schooling and occupational decisions was limited because large data sets that link college major selection, occupational choice, and compensation were not available. The researchers studied recent data from the US Census Bureau’s American Community Survey (ACS), including responses from millions of college-educated people about their choice of major and their career outcomes. They assigned each person a potential wage solely on the basis of their major choice—the wage the individual would receive if they were compensated like a native-born white male in his peak earnings years who studied the same subject. The idea was to isolate the specific effect of these choices. 

When Sloane, Hurst, and Black documented patterns in potential wages across five-year birth cohorts by gender, their analysis reveals that, on average, women chose majors producing lower potential wages than men did. But while there is an ever-present female penalty in potential wages, that gap has narrowed substantially. Overall, women in the 1950 birth cohort chose majors that reduced their potential wages, relative to their male counterparts, by 12.5 percent. Forty years later, that gap narrowed to 9.5 percent. 

However, the study also suggests that even if women major in a high-wage field such as chemical engineering, they may still end up working fewer hours and making less. Curious about the connections between educational specialization and occupational specialization, the researchers find that conditional on making the same major choice, women still sort into occupations with lower potential pay and fewer hours than their male peers. “Over all majors and across all cohorts, conditional on major choice, women are in occupations that have a work requirement that is about 3 percent less than comparable men. There is little trend in this gap across cohorts,” write Sloane, Hurst, and Black. Understanding why this happens is a topic for future research, they note. Prior research by Harvard’s Claudia Goldin and Lawrence Katz supports the finding that highly educated women tend to choose professions that require fewer hours on the job. 

The result: over all ages and cohorts, women are in occupations where they earn about 13 percent less than men do.