In this paper, we propose a novel rank-based procedure to decompose changes in the gender wage gap into three components: changes in the skill distribution, changes in the wage structure, and improvements in the position of women in a "distribution of reference." Using CPS data from 1979 and 1991, we perform the decomposition at each percentile of the wage distribution and show that the results are sensitive to the choice of distribution of reference (male versus overall wage distribution). We also find that relative wage gains of women may have been a source of increasing wage inequality among men.

Nicole M. Fortin and Thomas Lemieux are associate professors at the Departement de sciences economiques, Universite de Montreal. The authors would like to thank Christian Gourieroux, Joel Horowitz, and two anonymous referees for helpful comments and discussions. They also gratefully acknowledge financial support from the Social Sciences and Humanities Research Council of Canada and from the Fonds pour la Formation des Chercheurs et l'Aide a la Recherche of Quebec. The data used in this article can be obtained beginning November 1998 in through October 2001 from either author at the Department of Economics, University of Montreal, P.O. Box 6128, Downtown Station, Montreal (QC), Canada H3C 3J7.