The Gender Earnings Gap for New College Graduates in the U.S

In the paper we are proposing, we analyze the female-male gap in starting-salary offers for new college graduates in the U.S. using a data set that, with the exception of Paglin and Rufolo (1990) and McDonald and Thornton (2007), has not previously been used by economists in their research on gender pay differentials. The data set (which is proprietary) is from the annual surveys of the National Association of Colleges and Employers (NACE), which collects information on starting-salary offers made to new college graduates by employers in business, industry, government, and non-profit institutions.  A major advantage of working with the NACE data set is that it controls for gender differences in experience, promotions, job changes, and other factors on the gender earnings gap. In the paper we determine how much of the overall gender earnings gap for new college graduates can be explained by differences between men and women in the majors they have selected and by the types of first jobs they are offered.  In doing so we utilize a simulation technique similar to that used by Chiswick, O’Neill, Fackler, and Polachek (1974), Treiman and Hartmann (1981), and most recently by McDonald and Thornton (2007). The technique consists of estimating what the overall female-male pay ratio would be if women had selected the same majors and experienced the same distribution of offers by major as men.

In our analysis we extend the work of McDonald and Thornton, who estimated the recent- college-graduate gender earnings gap through 2001. McDonald and Thornton found that about 90-95% percent of the 10-percentage-point starting-salary differential could be accounted for by gender differences in college major or types of first jobs. They also found that the proportion of majors and job types in which average starting salaries of males exceeded those of females has tended to be in the 60-70% range over a span of almost three decades. Whether their estimates continue to hold up through the first decade of the new century is the question that we will investigate.

References

Chiswick, Barry R., O’Neill, June A., Fackler, James S., and Solomon W. Polachek.  1974. The effect of occupation on race and sex differences in hourly earnings. American Statistical Association Proceedings of the Business and Economics Section: 219-230. 

McDonald, Judith and Robert Thornton. 2007. Do new male and female college graduates receive

unequal pay?”  Journal of Human Resources, 32-48.  

National Association of Colleges and Employers (NACE). Salary surveys. Bethlehem, PA: various years, 1967-2010.

Paglin, Morton, and Anthony Rufolo. 1990. Heterogeneous human capital, occupational choice, and male-female earnings differences. Journal of Labor Economics 8: 123-144.

Treiman, Donald J., and Heidi I. Hartmann. 1981. Women, work, and wages: Equal pay for jobs of equal value. Washington, D.C.: National Academy Press.