Development of Wage GAPS in the US

This paper builds upon the vast amount of literature on wage gaps and investigates the development of the wage gaps across the United States in the period 2001-2011. It extends the previous research by examining a new time period and by looking at the wage gaps on a state level. To analyze these pay gaps data from the American Community Survey is used. I use two methods to investigate the wage gaps, Oaxaca decomposition and the Juhn Murpy Pierce decomposition, with the focus being on the later. What I find is that the gender wage gap has decreased by 5.5 percent points and the racial wage gap has increased by 4.1 percent points. On a state level most states follow these directions, but with a great deal of variability. For the gender wage gap only two states don’t follow the average direction, i.e. they show an increase in the gender pay gap. For the racial wage gap seven states show a decrease in the pay gap.