Male-Female Wage Differences: The Importance of Compensating Differentials

Abstract

This study investigates the extent to which differences in average earnings between men and women may be the result of sorting by the sexes into jobs with different average levels of disagreeable and agreeable working conditions. An analysis of data from the 1977 Quality of Employment Survey shows that, on average, men and women hold jobs with substantially different working conditions and that these differences are of a pattern suggesting the need to pay higher wages to attract employees to the jobs held by men. Estimation of wage equations shows that these differences in working conditions contribute significantly to the ability to explain average earnings for each sex.