Cross-Cohort Changes in the Returns to Schooling and Early Work Experiences: Consequences on the Gender Wage Differential

Marigee Bacolod, University of California, Irvine
Douglas McKee, University of California, Los Angeles

In this paper, we estimate the effect of schooling and of various types of work experiences, acquired by young men and young women in the U.S. during the 1960s, 1970s, and 1980s, on their subsequent wage attainment. We present and estimate an econometric framework to consistently estimate these returns. This framework accounts for both selection bias in the wage data and the potential endogeneity of young men and women’s decisions on the timing and accumulation of schooling and early work experiences. We use these estimates to subsequently assess separately the roles of cross-cohort changes in these returns, changes in the observed skill distribution, and in the distribution of unobservables of men and women, in the convergence of the gender wage gap.