Selection and the distribution of female real hourly wages in the United States

We analyze the role of selection bias in generating the changes in theobserved distribution of female hourly wages in the United States using CPSdata for the years 1975 to 2020. We account for the selection bias from theemployment decision by modelling the distribution of the number of workinghours and estimating a nonseparable model of wages. We decompose changes inthe wage distribution into composition, structural and selection effects.Composition effects have increased wages at all quantiles while the impactof the structural effects varies by time period and quantile. Changes in therole of selection only appear at the lower quantiles of the wagedistribution. The evidence suggests that there is positive selection in the1970s which diminishes until the later 1990s. This reduces wages at lowerquantiles and increases wage inequality. Post 2000 there appears to be anincrease in positive sorting which reduces the selection effects on wageinequality