A comprehensive model was developed to explain gender wage differentials. The model is made up of three major components—human capital variables, socioeconomic variables, and structural components of the labor market. Uniqueness is provided through availability of work history data, correction for selection bias, and control for interaction by age. Men's wages exceed women's for all age cohorts. Decomposition of the wage differential involves examining differences in endowments or characteristics by race, gender, and age cohort. Investment in human capital increases wages but explains little of the differential. Few labor market variables affect wages, yet they explain large percentages of the differential.
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Jones et al. (1993) studied this question.
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