Seminar: Cecilia Machado, Columbia University.

Title: Selection, Heterogeneity and the Gender Wage Gap.

Estimates of the female-male wage gap may be biased by selection since wages are only observed for those who are selected into employment. This paper first shows that parametric selection models and non-parametric bounds estimators yield starkly different conclusions about the evolution of the wage gap. The existing approaches assume that the sign of the selection is homogeneous, or that the average sign of the selection into employment is known. However, selection may be different in dif-

ferent parts of the female labor market. This paper proposes an alternative estimator which recovers a local measure of the wage gap in models with unobserved heterogeneity in the selection rule. The local measure applies to those who would always be employed. This is a relevant subpopulation for measuring the gender wage gap as the \always employed" women are similar to men in labor force attachment. Using CPS data from 1976 to 2005, I show that this measure of the gap has narrowed substantially from a -.573 to a -.267 log wage gap. In the presence of heterogeneity in selection, focusing on the proposed estimator is less distorting than usual selection corrections.