Female Immigration, Macroeconomic Conditions, and Short?Run Gender Wage Dynamics in the United States (2005–2021)

Abstract

The study investigates the yearly factors (determinants) that affect the gender-based wage gap in the United States, specifically examining the impact of the flow of women into the labor force (female immigration) compared to general economic conditions. This study focuses on the yearly or "short run" fluctuations in the gender based wage gap. The model used to analyze these yearly factors will use first differencing to capture the short-run factors and to avoid spurious relationships due to trends or patterns in the data over the years. Additionally, the Newey-West method for estimating heteroscedasticity-and-autocorrelation-consistent (HAC) standard errors will be employed to account for both serial correlation and the shocks experienced during periods of macroeconomic stress. The findings of the study reveal that there is no statistical evidence of an association between the yearly fluctuations in the flow of women immigrating into the workforce and the movement of the gender-based wage gap. On the other hand, the macroeconomic variables studied (unemployment and total economic output), appear to be the primary determinants of fluctuations in the gender-based wage gap. Specifically, during periods of recessionary economic downturns the wage gap decreases, which supports the idea that men's earnings tend to be more cyclical than those of women. Overall, these results support the conclusion that the short-run fluctuation of the gender-based wage gap is influenced primarily by macroeconomic conditions and therefore, policies to stabilize economic activity may provide more benefits in closing the wage gap in the short-run than policies attempting to limit the flow of immigrants into the workforce.