Prejudice and gender differentials in the US labor market in the last twenty years

Earnings differentials between men and women have experienced a stable convergence during the 1980s, following a process started in the late 1970s. However, in the 1990s the convergence has almost stopped. The first objective of the paper is to evaluate if discrimination, defined as explicit prejudice, may have a role in explaining this slowdown in the convergence. The second objective is to assess whether the prediction of a decrease in the proportion of prejudiced employers implied by the Becker’s model of taste discrimination is taking place and if so at what speed. These objectives are achieved by developing and estimating a search model of the labor market with matching, bargaining, employer’s prejudice and worker’s participation decisions. The results show that the proportion of prejudiced employers is estimated to be decreasing at an increasing speed, going from about 69% in 1985 to about 32% in 2005. Therefore prejudice is not estimated to be a relevant factor in explaining the slower convergence between male and female earnings in the 1990s. The results are consistent with the Becker’s model of taste discrimination if one is willing to assume a very slow adjustment process.