AN EMPIRICAL ANALYSIS OF EARNINGS DIFFERENCES BY SEX IN THE STATE OF NEBRASKA

There is a strong presumption that male-female earnings differences are attributable to discrimination. Earnings differences in the state of Nebraska are examined in an effort to isolate and determine the magnitude of sex discrimination in earnings. Aggregate earnings data by sex, educational attainment, and occupation show that women experience a considerable earnings disadvantage compared to men. Economic theory and the methods of prior empirical research serve as a guide in developing an analytical framework of earnings differences by sex in Nebraska. An econometric model for earnings is specified and interaction terms are introduced to control for the combined effects of sex, marital status, and occupational level. The equation is estimated through the use of multiple regression analysis. Inferences are drawn from the results and adjusted female to male earnings ratios are calculated. When these are compared to the unadjusted ratios derived from the aggregate data, it is clear that the controls increased the female-male earnings ratios. Nevertheless, sizable earnings differences exist after the adjustments. Women earn less than men regardless of marital status and occupational level. Although the evidence is circumstantial, the results suggest that sex discrimination with respect to earnings is present in Nebraska. The sources of the male-female earnings differences may stem from (1) direct labor market discrimination, (2) discrimination generated by societal role differentiation, and (3) discrimination embodied in the institutional structure, viz., the Social Security system, federal tax system, and the welfare system. Direct labor market discrimination of an illegal variety may be present, but it could not be isolated and measured. If the absence of this type of discriminantion is assumed, sex discriminatory societal role influences along with institutional discrimination are still present. Therefore, the empirical results suggest the presence of sex discrimination with respect to earnings in Nebraska, but there is no conclusive evidence to suggest that it is caused by direct labor market discrimination or illegal practices