Oaxaca Theory Of Discrimination

Oaxaca (1973) points out that the combination of culture, tradition, and overt discrimination generates an unfavorable occupational distribution of female workers. Based on the data from the 1967 Survey of Economic Opportunity, Oaxaca concludes that within the same occupation, female workers tend to be paid less than male workers. In addition, the difference in the coefficients of the experience variables indicates that the wage structure for males and females might be different even in the absence of discrimination. Therefore, he argues that a substantial proportion of the male-female wage differential contributes to the effects of discrimination. Since a lot of women engage in relatively low payment works, their total average wage is lower than that of men. Hence, because different industries have different compositions of workers, it will be efficient if Oaxaca uses institution-specific studies to find reasons …show more content…
By using data from the 1989, 1992, and 1999 Outgoing Rotation Group Files of the CPS, they conclude that those particular industries, which pay more than others, on average, have higher concentrations of men. Another possible reason is that female workers tend to have less experience than men and higher earnings are associated with more experience; therefore, females tend to earn less. The lack of actual work experience of CPS data intensifies the wage differentials between females and males. Thus, including a factor about actual work experience will increase the reliability of their result. In particular, they find that the wage discriminatory gap between females and males has decreased since 1989, showing that the wage differentials might change over