Women's work plans: contrasting expectations and actual work experience, (EXCERPT), Monthly Labor Review Online, November 1987

Women's work plans: contrasting
expectations and actual work experience

Lois B. Shaw and David Shapiro

The human capital literature in the past decade has emphasized that women's early work expectations affect their subsequent earnings and occupations.¹ If women expect to withdraw from the labor market when they have children, they may have little incentive to invest in work-related skills early in their working lives. They may look for jobs that pay well initially but offer few prospects for on-the-job training and advancement. They may also choose occupations in which skill depreciation will be limited during periods of labor market withdrawal.² These considerations lead to the prediction that the earnings of women who plan for continuous labor force participation will increase more rapidly than those of women who expect to experience work interruptions.

We use questions from the National Longitudinal Surveys of Labor Market Experience of Young Women (NLS) to examine how young women's plans affect their subsequent work experiences and earnings.³ We find that those young women who planned to be in the labor market at age 35 were indeed more likely to be employed when they reached that age. More importantly, planning to work yielded a significant net wage advantage: among women in their mid-thirties, those who, throughout their twenties, had consistently planned to work had wages that were nearly 30 percent higher than those who had never planned to work, even after controlling for work experience and other determinants of wage rates. This wage advantage was even greater for those women who were employed in occupations in which they had expected to be employed.

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Footnotes

1 See, for example, Jacob Mincer and Solomon W. Polachek, "Family Investments in Human Capital: Earnings of Women," Journal of Political Economy, March/April 1974 supplement, pp. S76-S108; Jacob Mincer and Solomon W. Polachek, "An Exchange: Theory of Human Capital and the Earnings of Women: Women's Earnings Reexamined," Journal of Human Resources, Winter 1978, pp. 118-34; Solomon W. Polachek, "Differences in Expected Post-School Investment as a Determinant of Market Wage Differentials," International Economic Review, June 1975, pp. 451-70; Solomon W. Pollachek, "Discontinuous Labor Force Participation and its Effects on Women's Market Earnings," in Cynthia B. Lloyd, ed., Sex Discrimination and the Division of Labor (New York, Columbia University Press, 1975) pp. 90-122' and Yoram Weiss and Reuben Gronau, "Expected Interruptions in Labour Force Participation and Sex-Related Earnings Growth," Review of Economic Studies, 1981, pp. 607-19.

2 Polachek has been the leading proponent of this view. In addition to the papers cited in the previous footnote, see also Solomon W. Polachek, "Occupational Segregation: An Alternative Hypothesis," Journal of Contemporary Business, 1976, pp. 1-12; Solomon W. Polachek, "Sex Differences in College Major," Industrial and Labor Relations Review, July 1978, pp. 498-508; and Solomon W. Polachek, "occupational Segregation Among Women: Theory, Evidence and a Prognosis," in Cynthia B. Lloyd, Emily Andrews, and Curtis Gilroy, eds., Women and the Labor Market (New York, Columbia University Press, 1979), pp. 137-57. The ability of the human capital approach to account for observed male-female differences in wages and occupations has been questioned in Steven H. Sandell and David Shapiro, "The Theory of Human Capital and the Earnings of Women: A Reexamination of the Evidence," Journal of Human Resources, Winter 1978, pp. 103-117; Mary Corcoran and Greg J. Duncan, "Work History, Labor Force Attachment, and Earnings Differences Between the Races and Sexes," Journal of Human Resources, Winter 1979, pp. 3-20; Paula England, " The Failure of Human Capital Theory to Explain Occupational Sex Segregation," Journal of Human Resources, Winter 1979, pp. 3-20; Paula England, "The Failure of Human Capital Theory to Explain Occupational Sex Segregation,: Journal of Human Resources, Summer 1982, pp. 358-70; and Andrea H. Beller, "Occupational Segregation by Sex: Determinants and Changes," Journal of Human Resources, Summer 1982, pp. 371-92.

3 A complete description of the NLS young women's sample may be found in Center for Human Resources Research, The National Longitudinal Surveys Handbook (The Ohio State University, 1986).

National Longitudinal Surveys

Developments in women's labor force participation.—Sept. 1997.

Effects of intermittent labor force attachment on women's earnings.—Sept. 1995.

Are women leaving the labor force?—July. 1994.

Family members in the work force.—Mar. 1990.

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