Wage Inequality and the Gender Wage Gap: Are American Women Swimming Against the Tide?

Zsuzsa Daczo, University of Maryland

For over three decades wage inequality has been growing in the US while the gender wage gap declined. Current literature argues that the gender wage gap would have decreased even more, had overall wage inequality not grown, so women have had to swim against the tide to reduce the gender wage gap. I argue that when wages of men with no more than high school education declined, two things happened simultaneously: men’s mean wage decreased relative to women and male wage inequality increased (much more so than female wage inequality). The statistical method currently used assumes that there is only one wage structure, miscalculating the relationship between wage structure and gender pay gap. This paper uses a new method that takes into account gender differences in wage structure and shows that the increase in wage inequality went in tandem with the narrowing of the gender wage gap.