Volume 29, Number 2 (Spring) 1994
Kim, Moon-Kak, and Solomon W. Polachek . 1994. "Panel Estimates of Male-Female Earnings Functions." Journal of Human Resources 29(2): 406-428.
This paper applies single and simultaneous equation fixed-effects (FE) and random-effects (RE) panel data estimation techniques to obtain male and female earnings function parameters. Using the Panel Study of Income Dynamics (PSID), the paper finds that earnings appreciation with experience and depreciation with labor market intermittency are comparable for men and women. Further, skill atrophy rates increase not decrease once one controls for heterogeneity and endogeneity. Finally the unexplained male-female wage differential declines from 40 percent to 20 percent when one adjusts for heterogeneity. Adjusting for endogeneity depends very much on the choice of instruments. However, when adjusting for endogeneity the gender earnings gap falls and approaches zero percent. These results hold for two separate subsamples so that the estimates appear robust independent of sample selectivity.
Moon-Kak Kim is a research economist at the Sunkyung Economic Institute in Seoul, Korea. Solomon W. Polachek is a professor of economics at the State University of New York at Binghamton. An earlier version of this paper was presented at the December 1991 Donner Foundation Conference on the Economic Well-Being of Women and Children held at the University of Minnesota Industrial relations Center. This study builds on earlier research initiated by Polachek (1985). The authors would like to thank Larry Ball and Chuck Miesner for extensive help on that project and Haim Ofek, David Neumark, Kathryn Shaw, and Bong Yoon for comments on an earlier draft. The authors are especially indebted to Michael Keane for providing valuable insights regarding the appropriate choice of instrumental variables for the first-difference estimates, as well as to Kenneth I. Wolpin and an anonymous referee who provided detailed comments and suggestions for dramatically improving the paper's exposition. The data source for this paper is the Panel Study of Income Dynamics obtained from the Inter-University Consortium for Political and Social Research (ICPSR). The data used for this research and an appendix containing the full set of coefficients will be available from August 1994 to August 1997 from Solomon W. Polachek, Department of Economics SUNY-Binghamton, Binghamton, NY 13902-6000.
© 2002 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X