DO WORKERS ACCURATELY PERCEIVE GENDER

WAGEDISCRIMINATION?

MARY B. HAMPTON and JOHN S. HEYWOOD*

Using data froma 1987 American Medical Association surveyof young

physicians,the authorsinvestigatehow accuratelythe women in the sample
perceived the gender wage discriminationaffectingthem. Contraryto the
conclusion ofsome studiesthatwomeninaccuratelyperceivegenderdiscrimi-
nation against them,this studyfindsa strong,positivecorrelationbetween
women's perceptionsof the gender income differencestheywere experienc-
ing and econometricestimatesofthosedifferences.The womenin thissample
accuratelyperceived gender wage discrimination,and built that perception
into theirjudgment of the amount bywhichtheywere underpaid.

Over the past twodecades economists courtsbase awardson objectiveevidence of

have estimatedprogressively more so-
phisticatedmeasures of gender discrimina-
tion. These estimates,all of which examine
unexplained residuals, follow from single
equation methods, the original Oaxaca
(1973) decomposition,morecomplicatedde-
compositions (Neumark 1988), and even
methodsthataccountforfeedbackin educa-
tion and occupational choice (see Daymont
and Andrisani1984). More recently,there
has been intenseinterestin testingforcorre-
lationsbetweenthese statisticalmeasuresof
gender discriminationand femaleworkers'
perceptionsofdiscrimination. AlthoughU.S.
*MaryHampton isAssistantProfessorofEconomics
at the Universityof Wisconsin-La Crosse, and John
Heywood is Associate Professorof Economics at the
UniversityofWisconsin-Milwaukee.The authorsthank
PhilipR. Kletkeand theAmericanMedical Association
for making the data available and Dale Belman,
LawrenceDaellenbach, MarianneFerber,MarleneKim,
GretchenMillerJames Peoples, and RichardPerlman
forhelpfulcomments.
genderwagediscrimination, notperceptions,
the question of whetherthe perception of
theworkerand theevidenceof thecourtare
in harmonyis an importantone, since it is
likelyto be the perception of the gender
differential thatdetermineswhetheror not
an initialcomplaintis brought.
In this paper we compare young female
physicians'perceptionsoftheextentoftheir
underpaymentwiththe actual gender wage
discriminationaffectingthem. This exami-
nation providesevidence on which charac-
in additionto measuresofdiscrimi-
teristics,
nation, affectwomen's perceptions of the
adequacy of theirearnings.To our knowl-
edge, no previousstudyhas approached that
question. Instead, researchersin previous
studieshave been forcedto drawinferences
abouttheperceptionsoffemaleworkersfrom
verybroad questions.The findingspresented
in thosestudies(Kuhn 1987, 1990; Barbezat
The authorswill provide,on request,copies of the
rawdata and the programsused in thisstudy.

Industrialand LaborRelationsReview,Vol. 47, No. 1 (October 1993). ? byCornell University.

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 GENDER WAGE DISCRIMINATION
and Hughes 1990), surprisingly, implythat
women's claims of discriminationare least
likelywhenmeasureddiscrimination is high-
est, suggestingthat either women do not
perceive discriminationor economistscan-
not measure discrimination.
Althoughthese studies provide theoreti-
cal explanations for the correlationsthey
present,theydo not providedirectevidence
on thefundamentalquestion:howaccurately
do women perceive the gender wage differ-
entials affectingthem?They are unable to
provide such evidence because the depen-
dentvariablestheyuse flowfrombroad ques-
tionseitherabout discriminationin general
(not limitedto earnings) or about affirma-
tive action (not even limited to issues of
gender).
All threeof thoseearlierpapers predicate
the use of such broad questions (and the
resultingprobitspecifications)on the exist-
ence ofan underlyingcontinuouslatentvari-
able. Althoughthe exact natureof thatun-
derlyingvariable maybe unclear, one obvi-
ous interpretationis that it measures the
perceived extentof gender earningsdiffer-
ences. Thus, it would be advantageous to
measuredirectlywomen's perceptionsoftheir
earningsrelativetocomparablemen's,rather
than depend on an assumed relationship
betweenthoseperceptionsand the dichoto-
mousvariablesused in theearlierstudies.As
Kuhn admits,the most appropriatedepen-
dentvariablewould highlightwage discrimi-
nation on thejob.
We argue thatthe correlationspreviously
identifiedare an artifactof the questions
being asked,and thatwitha betterquestion,
a strongpositiverelationshipbetweenactual
discrimination and perceiveddiscrimination
emerges.In whatfollows,surveyresponsesof
young physiciansare used to examine the
correlationbetween perceptions of under-
paymentand estimatesof gender wage dis-
crimination.We firstdeterminethe differ-
ence betweeneach woman's actual income
and the income she deems adequate. Then
we examinewhethera portionofthis"under-
payment"reflectsa perceivedgender differ-
ential by examininghow the size of the re-
ported underpaymentcorrelates with the
actual estimatesof gender discrimination.
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37
The Data
In 1987, the American Medical Associa-
tion (AMA) undertookan extensivesurveyof
youngphysicians. The samplewasdrawnfrom
the AMA PhysicianMasterfileof the entire
U.S. physicianpopulation. Successfulinter-
viewswere completed with5,865 physicians
who were under the age of 40 and in their
firstsixyearssince residency.The responses
weremergedwithotherdata fromtheAMA's
ongoing Socioeconomic MonitoringSystem
(SMS) and theAssociationofAmericanMedi-
cal Colleges' Student and Applicant Infor-
mationManagementSystems.The resultis a
detailed sample of educated youngworkers
in a singleoccupation. The analysisthatfol-
lowsis based on responsesof the 529 female
and 1,343 male employeesforwhom infor-
mation is complete.' Table 1 presents the
definitionsand meanvaluesofthecharacter-
isticsthatdescribe thissample.2
This study breaks new ground with its
focuson new entrantsin thejob marketfor
physicians.Careerinterruptions and changes
inhours,whichareespeciallycommonamong
women, mayresultin unobserveddifferen-
tialsin the patternof on-the-jobinvestment
duringan individual'scareer,makingitdiffi-
cult to analyze data on sampleswitha wide
rangeofages.The homogeneity ofoursample
of young physicians,all of whom are in the
same profession,have similarages, and have
similar experience, largely averts that
problem.
Previous studies have found substantial
unexplained gender earnings differentials
forphysiciansin general and-despite their
presumed homogeneity-for young physi-
cians in particular.Using a 1972 AMA gen-
eral survey,Kehrer (1976) found a 31%
differentialnetofthatdue to measuredchar-
acteristics. Using a similar 1977 survey,
'The data reflecta large representationof minority
women. This characteristicof the surveyreflectspartly
a conscious oversamplingbytheAMA,partlya focuson
employeephysicians,and partlytheincreasingnumber
ofminority women who are becoming medical doctors.
2The data and the documentation are available
fromthe Inter-University ConsortiumforPoliticaland
Social Research,the InstituteforSocial Research,Ann
Arbor,Michigan.
38 INDUSTRIAL AND LABOR RELATIONS REVIEW

Table1. Variable Definitionsand Values of Means and Proportions.

Variable Female Male

Experience: 1987 less the yearphysiciancompleted residentgraduate medical

training 3.31 3.37
PriorJob:Answeryes to the question, "Beforeyou startedthispractice,did you
have another practice?" .329 .381
Board Certification:In primaryspecialty .643 .683
Job Opportunity:Answeryes to the question, "Did you have another practice
opportunitythatyou would have taken ifyou had not decided to practice in
thiscommunity?" .444 .581
FMG: Graduate of a foreignmedical school .125 .141
SMSA: Standard MetropolitanSurveyArea .915 .876
Tax Benefit:Practiceorganized forprofit,and qualified tax-deferredbenefit
plan contributionincluded in net income .446 .461
AMA Member: Member of the AmericanMedical Association .318 .378
HMO Emp.oyee: Employee of a Health Maintenance Organization .106 .057
PatientCare Hours: Hours spent in the primarypractice providingpatientcare
during the mostrecent complete week of work (including paperwork,supervising
people, and other activitiesrelated to patientcare) 39.07 42.66
Parents' Income: Described as upper income .185 .200
Spouse's Income: Total earningslastyear 38,418 13,053
MalpracticeClaim: Answeryes to the question, "Have any claims been filed
againstyou?" .072 .111
Age 34.27 34.63
Married .662 .786
Young Children: Number of youngchildren at home .694 .897
Minority:Black, Asian/Oriental,PacificIslander,American Indian, Alaskan
Native,or Hispanic .405 .282
Hispanic .100 .120
No Plans to Move: An ordinal measure (1-5) based on the answerto the question,
"How unlikelyare you to leave thispractice in the next twoyears?" 2.72 2.82
Anesthesiology .045 .044
Obgyn: Obstetric/Gynecology .081 .042
Internal:InternalMedicine .216 .276
Emergency:EmergencyMedicine .032 .042
Pediatrics .229 .096
Radiology .061 .060
Pathology .034 .048
Psychiatry .066 .054
Surgery:General and specialized .053 .121
GP-FP: General-family practice .126 .166
Other: Other specialtiespractice .057 .051
Source:Surveyof the Practice Patternsof Young Physicians,1987.

Langwell (1982) found a net differentialas
high as 26%. Ohsfeldtand Culler (1986),
usinggeneral1982 and 1983 surveys,founda
but theyused a
lower 12% net differential,
male earningsbase ratherthana femaleearn-
ingsbase toestimatethepercentage.Estimat-
ing severalearningsdifferentialsbyvarying
thetreatment ofthephysician'sspecialtyand
the choice of the earningsbase, Hampton
(1990) foundentry-levelgenderwage differ-
entialsfrom18% to 35%.
In the AMA's 1987 survey,young physi-
cians ofbothgenderswereasked,"Consider-
ing yourcareer stage,whatdo you consider
an adequate income (afterexpenses but be-
foretaxes) fromyourprofessionalactivities?"

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 GENDER WAGE DISCRIMINATION 39

This question mayseem diffuse,but we be- (3) Yei=Ixx.PF+ WtF

lieve thatit actuallyservesverywell. In par- (4)
ticular,the answerto thisquestion allowsus (4) Yt= ZXiMP,+ tm
to measure the gap between each woman's
actual income and theincome she considers
adequate givenhercareerstage.We thenare (5) AF=
t jXX.OF+
v _i
f.
able toexaminewhethera portionofthisgap
reflectsa perceivedgender differential and (6) Am=t ZX .m+ m
j zgJJ t
how closely the size of this portion corre-
sponds to the actual gender earningsdiffer- Table 2 presents ordinaryleast squares
ential. estimatesofthecoefficients in theequations,
F, I3,, 0,F and ON.The vector X.. includes
EarningsEquations typicalhuman capital and explanatoryvari-
ables such as yearsof experience,qualityof
To examine the association between ac- education,thenatureofthephysician'smar-
tual gender differentials and perceptionsof ket and practicetype,and the primaryspe-
the differential, we firstcreate a measure of cialtypracticed. (See Ohsfeldt and Culler
perceivedunderpayment ofearnings.We call 1986.) The surveyallowsthevariablelisttobe
thisvariable Perceived Underpaymentand expanded to controlforadditionalpersonal
measure it separatelyforwomen and men: characteristicsoftennot found in previous
(1) FPUI= I -Yt studies, such as age, race, marital status,
spouse's and parents'income,thenumberof
youngchildrenat home, and whetherthere
(2) MPU= A - Y has been a medicalmalpracticeclaimagainst
where for each individual i, female (F) or the physician.The resultsfromthelog earn-
male (M), Y is the naturallog of actual an- ings equations are verysimilarto past esti-
nual income and A is the naturallog of the mates for physicians. (See Kehrer 1976;
claimed "adequate" income. The difference Langwell 1982; Ohsfeldtand Culler 1986.)
between the two representsthe perceived An examinationoftheearningsequations
underpayment. (3-6) withoutthe inclusionof the statistical
At issue is whetherPerceived Underpay- measure of discriminationallows a prelimi-
ment (PU) is correlatedwithstatisticalmea- narycomparisonof the coefficients foreach
suresofdiscrimination.' Answering thatques- gender. Some personal characteristicsthat
tionrequiresboth thecreationofthosemea- affectthe actual wage do not not affectper-
suresand the inclusionof appropriatecon- ceptions of what the wage should be. For
trols. Clearly,men as well as women may instance,both maritalstatusand the pres-
perceivetheiractual income as inadequate. ence of children are positivelyassociated
Therefore,in our finalfemaleregressionswe withthe actual income of men, but neither
controlfortheextentofearningsinadequacy seems to influencemen's idea ofwhatrepre-
thatan otherwiseidenticalman would per- sents an adequate income. Similarly,one
ceive.To generateboth thiscontroland the factorpositivelyaffectingthe actual income
traditionalmeasures of discrimination,we ofwomen (as wellas thatofmen) but having
estimatedthe followingfourequations: no effecton the income women perceiveas
adequate is the taxbenefit(thatis,theinclu-
sionin netincomeofa qualifiedtax-deferred
benefitplan contribution).A possibleexpla-
3In whatfollows,the termdiscrimination
means the nation for the latteris thatwomen believe
statisticalmeasurementof the differencebetween the thatincome should be based on something
actual earningsofa womanand her earningsifshe had otherthan tax planning.
been compensated according to the actual earnings
structureestimatedformen. We recognize thatmany Still other income equation differences
other unmeasured influencescan be captured in this between men and women exist.Graduation
definitionof discrimination. froma foreignmedical school appears to be

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40 INDUSTRIAL AND LABOR RELATIONS REVIEW

Table2. "Adequate" and Actual Earningsof Young Physiciansby Gender: Ordinary

Least Squares Equations.
(t-Ratiosin Parentheses)
Female Male
Variable
Independent Adequate Actual Adequate Actual

Experience -.0083 .0287 .0206 .0529

(-.59) (1.49) (2.44) (5.62)
PriorJob -.0189 -.1333 -.0259 -.0587
(-.62) (-3.14) (-1.38) (-2.80)
Board Certification .0919 .0795 .0683 .1123
(2.75) (1.72) (3.22) (4.74)
Job Opportunity .0263 .0162 .0399 .0412
(.91) (.41) (2.19) (2.02)
FMG -.0140 -.0968 .0775 -.0429
(-.29) (-1.44) (2.77) (-1.37)
SMSA -.0440 -.0629 .0206 .0304
(-.83) (-.85) (.74) (.97)
Tax Benefit .0436 .1577 .0726 .0837
(1.52) (3.96) (3.97) (4.09)
AMA Member .0713 .1076 .0493 .0749
(2.30) (2.51) (2.60) (3.53)
HMO Employee -.0223 .0523 -.0352 .0499
(-.48) (.81) (-.90) (1.14)
PatientCare Hours .0029 .0039 .0041 .0038
(3.56) (3.49) (8.59) (7.03)
Parents' Income .0037 .0016 .0051 .0119
(.09) (.03) (.23) (.47)
Spouse's Income .02-5 .03-5 .035 .05-6
(.63) (-.71) (.32) (-.50)
MalpracticeClaim -.0171 .0188 .0795 .1258
(-.30) (.24) (2.74) (3.88)
Age .0157 .0202 .0190 .0136
(2.44) (2.27) (4.81) (3.07)
Married -.0358 .1065 .0249 .0501
(-.90) (1.94) (1.00) (1.80)
Young Children -.0518 -.1154 .0146 .0202
(-2.61) (-4.19) (1.36) (1.68)
Minority .0745 .0158 .0256 .0029
(2.23) (.34) (.99) (.10)
Hispanic .0517 .0798 .0590 .0568
(1.01) (1.12) (1.73) (1.49)
No Plans to Move -.0097 .0299 -.0069 .0279
(-.82) (1.80) (-.92) (3.32)
Anesthesiology .7014 .5160 .5009 .4254
(8.94) (4.75) (10.28) (7.80)
Obgyn .4858 .3677 .4804 .2909
(7.11) (3.88) (9.54) (5.16)
Internal .2017 .1337 .1479 .0602
(3.93) (1.88) (5.19) (1.89)
Emergency .4687 .4733 .3683 .4317
(5.20) (3.79) (7.46) (7.81)
Pediatrics .1109 .0600 .0160 -.0260
(2.17) (.85) (.43) (-.63)

(Continued)

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 GENDER WAGE DISCRIMINATION 41

Table2 (Continued)
Female Male
Variable
Independent Adequate Actual Adequate Actual

Radiology .4869 .3055 .4987 .3512

(6.84) (3.10) (11.55) (7.27)
Pathology .2820 .1791 .1872 .2004
(3.21) (1.47) (3.97) (3.80)
Psychiatry .2451 .2109 .2311 .2310
(3.49) (2.16) (5.05) (4.51)
Surgery .4803 .2723 .3972 .2634
(6.29) (2.57) (11.26) (6.67)
Other .3802 .1999 .2467 .0977
(5.21) (1.98) (5.37) (1.90)
Constant 10.3262 9.7261 10.1463 9.9321
(47.27) (32.13) (75.50) (66.03)
Adjusted R2 .31 .20 .33 .27
N 1,343 529

associated witha relativelyhigh "adequate ing thisprocedurewiththe twofemaleequa-

income" among male physicians,as does tions generates an estimated Female
hispanicethnicity.Minoritygroup member- Perceived Underpayment (FPU) for each
ship positivelyaffectsactual wages,but only physician:
forfemalephysicians.In each of thesecases,
MPU= A _PI = EY
A A A A

these individualsmay lack access to good (7)

information on earningsin theiroccupation.
Finally,one resultis consistentacrossgen- (8) FPU= A Y'= Xiy'
ders: a positiverelationshipbetweenjob at- whreA A AA
tachmentand actualwages.Thus,bothbeing and wherey A= OF - pF
whereTa O1 _ AM,
withthefirstjoband havingno plans to leave Table' 3 presents estimatesof each per-
are positivelyassociated withactual income ceived underpayment for men and for
forbothmen and women.These factorsplay women.For male employeesonly,the mean
no role, however,in perceptionsof income MPUis .224, indicatingthaton averagetheir
adequacy.Whereasemployeesmayperceive "adequate income" is 25% more than their
job attachmentas unimportant,employers actual.4ForfeAmale employeephysiciansonly,
appear to providefinancialrewardsforsuch the mean FPU is .253, indicatingthat, on
behavior. average,theincometheyperceiveas adequate
is 29% more than theiractual income. The
TestingFramework finding that perceived underpayment is
greateramong women thanamong men is a
Fromtheequationsestimatedin theprevi- firstindicationthatfemaleworkersmayper-
ous section,we generatethreedifferentials. ceive a gender income differential.
fromthe twomale re-
First,the coefficients The estimatedunderpaymentscan help
gressionsare used to create an estimated isolatehowmuch of thegenderdifferenceis
Male Perceived Underpayment(MPU for due to differencesin the estimatedcoeffi-
each physician.This value is the difference cientsratherthantodifferences in character-
betweentheincome thata physicianconsid- istics.A comparison of the two estimated
ers"adequate"and thatphysician'sestimated
actual income given the structureof coeffi-
cients of the male equations. Thus, we can 4Thispercentageis derivedbysubtractingone from
generate an estimated underpaymentfor the antilog of the mean MPU, since the income equa-
womenbased on themale equations.Repeat- tionsare all in naturallogs.

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42 INDUSTRIAL AND LABOR RELATIONS REVIEW

Table3. Underpaymentand DiscriminationMeans, by Gender.

Gender N FPU MPU FPU MPU D

Male 1,343 .224 .228 .224 .203

Female 529 .253 .253 .234 .173

underpayments(7) and (8) forwomen only The fundamentaltestestimatesthedeter-

holds constantcharacteristicsthatdifferenti- minantsof FPU forwomen in a regression
ate menand women,suchas women'sgreater that controls for MPU, specialty,personal
likelihoodof being pediatricians,an unusu- characteristics,
and themeasuredor "statisti-
allylow-payingspecialty(see Hampton19291). D:
cal" differential
For femaleemployeesonly,themean MPUis
.234, compared withthe FPU of .253.5This (10) FPU =I BX..j + ciMPU
I i
+ aCD
2 i
+ e..
I
resultindicatesthatoverhalfthe difference This testprovidesan immediateexamination
in thePerceivedUnderpayment(.253- .224) ofwhetherthegenderincome differential is
is accounted for by differencesother than recognizedbywomen in theirperceptionof
characteristics(as FPU- MPU = .253 - .234). underpayment.We include as regressorsex-
Examiningthetwoestimatedunderpayments perience, quality of education, age, race,
formale employeesrevealsa similarstory. marriage,parents' income, membershipin
Next,we estimatethegenderdifferential, the AMA, spouse's income, the number of
young children at home, and the primary
(9) D b.1
specialtypracticed. Th1eassumptionis that
where b. = W- [Y. This standard measure, afterwe controlforMPUand thesepersonal
which provides tiie necessaryvariable for characteristics, theremainingvariance inFPU
testingtherelationshipbetweenperceptions should be correlatedwithD if women per-
ofthegenderdifferential and the"statistical" ceivediscrimination. Indeed, ifwomenaccu-
measure of discrimination,is the same one ratelyperceivegenderdifferentials, we might
used by previousauthors. (See Kuhn 1987; expect a2 to equal one, as each unit of the
Barbezat and Hughes 1990.) For women,D gender differentialwould translateinto a
takesan averagevalue of .173 in our sample. unitoftheperceivedunderpayment.In such
Thus,femalephysiciansin thesamplewould a regression,ifmen and womenhave similar
have received 18.9% higher earnings, on beliefsabout theadequacy and actuallevelof
average,had theybeen compensatedaccord- marketrewardsaftercontrollingfortheother
ingto theactualearningsstructure estimated personal characteristicsand fordiscrimina-
for male physicians.Table 3 showsD takes tion,thenwe mightalso expect a coefficient
even a slightly largervalue formen. On aver- ofone on MPU,thefemaleestimateofunder-
age, male physiciansin the sample would paymentusing the male equations. In addi-
havereceived22.5% lowerearningshad they tion,thetestexamineswhetherthepersonal
been compensated according to the actual characteristics affectthe perceptionsof dis-
earnings structure estimated for female crimination.Once thestatistical measureand
physicians.6 MPU are controlledfor,the remainingsig-
nificantcoefficientsindicate those personal
characteristicsassociated with the highest
5Because the regressiongoes throughthe point of claimsof underpayment.
means, the mean estimatedperceived underpayment This testingframeworkruns the risk of
forwomen, FPU, is the same as the mean actual per- multicollinearity, because femalecharacter-
ceived underpayment.Of course, the same is true of isticsenterdirec~tlyas controls(X.) and indi-
the male perceived underpayments.
rectly in bothMPUand D. Such problemsalso
6Obviously,such a compositeestimatetellsus noth-
ing about the sources of discrimination-employers, exist in previouswork, but in this case the
fellowemployees,or patients. need to control for MPU compounds the

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 GENDER WAGE DISCRIMINATION 43

potentialforinaccurateestimates.In the re- nation measure.Althoughthisvectorof re-

sultsthatfollow,we provideseveralvariations gressorsdoes onlya modestjob ofexplaining
on (10) designed to presenta fullerpicture, the female perceived underpayment,8the
and we conclude that collinearitydoes not crucial variables behave as expected, and
obscure the fundamentalrelationships. severalcharacteristics aresignificant.9 Women
An additionalmodificationof our testing seemtohaveperceptionsthatareverysimilar
frameworkexamines whetheror not men to thoseofmenwiththesame characteristics.
perceive earnings discrimination.This ex- In this estimatethe coefficienton MPU is
aminationtestsfora significant relationship significantly different fromzero and remark-
betweenthemen's MPUand D. A significant ablyclose to one, suggestingthateach addi-
coefficienton Din such an equation could tional percentage point of inadequacy per-
reinforceour findingthat the economists' ceivedbya man is also perceivedbya woman.
statisticalmeasure is capturingsomething In addition,the coefficienton the discrimi-
importantin the labor market.Such a test nationmeasureis highlysignificant and also
estimatesthisrelationshipin the regression veryclose to one.
Thus, conditional on their trainingand
( 11) MPU = BX. + c3FPU I + 4D I + e., background,women seem to hold percep-
JI 31
j I

where the vector of male characteristicsis tions that accuratelyreflectthe extent to

used as the base to generateD = bXXb.. whichtheyappear discriminatedagainstus-
Thus, the testis symmetricto ithoseper- ingtheeconomists'typicalmeasure.Although
thispoint estimatedoes varyacross regres-
formedforwomenbuttheanticipatedsignof
sions, itis oftenclose to one. Indeed, in eight
C4differs.
Though itis possiblethatmen feel
of the twelveregressionswe present, the
theydo not deserve that portion of their
hypothesisthatthe coefficientwas equal to
earningsthatrepresentsthe discrimination
one could not be rejected.Thus, ifa female
differential,it seems more likelythat they
physician feelsher actual income fallsshort,
expecta certainor "typical" differential.
Thus,
if the actual differentialis unusuallylarge, by some given percentage,oftheincome she
deems adequate, we have been able to at-
men mayperceivetheirearningsto be more
tribute some of that differenceto the esti-
acceptable. A negativecorrelationbetween
mated extent of gender discriminationto
discriminationmeasures and the Male Per-
she is subject.10
ceived Underpaymentmightthenbe antici- which
In columns 2, 3, and 4 we attempt to
pated.7
investigatethe influence of collinearityby
restricting the fullestimation.Some demo-
Results graphicand human capital controlsare re-
Table 4 presentsfourvariationsof equa- moved in column 2, and all are removedin
tion(10). The firstcolumnpresentsthecom- column 3. In column 4 these controlsare
plete estimatethatincludesforeach woman
the set of controls,the estimatedmale Per-
8SimilarlysmallR2Isoftenoccur in studiesofgender
ceivedUnderpaymentgivenher characteris- discriminationthatemployvectorsof personal charac-
tics,and her individualvalue of thediscrimi- teristics.For studies of physicians,see Kehrer (1976)
and Langwell (1982). For a more general study,see
Thornton et al. (1983).
'Indeed, this consideration raises an interesting 9Again, given that the characteristicsenter indi-
possibilityregardingpreviousexaminationsofwhether rectlyboth in the estimatedmale perceivedunderpay-
women perceive earnings discrimination.There may ment and in the discriminationmeasure, the lack of
exist certaincircumstancesin which anyone, male or significanceof the remainingcharacterisitcsis not too
female,is likelyto claim being a victimof discrimina- surprising.
tion. Heywood (1992) shows thateven whitemen are '01fall other characteristicsare held constantand
far fromreluctantto claim being the victimsof dis- the coefficientson both the estimatedmale perceived
crimination.The failureof past studies to control for underpaymentand the discriminationmeasure are
this tendencymay make any correlation between fe- presumed to be 1, a male perceived underpaymentof
male claims of discriminationand actual earningsdis- 5% and a discriminationestimateof 10% willgenerate
criminationmeasuresharder to isolate. a female perceived underpaymentof 15%.

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44 INDUSTRIAL AND LABOR RELATIONS REVIEW

Table 4. Female Underpayment: D fromTable 2.

(t-Ratios in Parentheses)

Model
Independent
Variable (1) (2) (3) (4)

Constant .1210 .3489 -.0347 .3441

(.43) (1.47) (-.70) (1.29)
Experience -.0213 -.0165 -.0550
(-.93) (-.91) (-3.06)
Age -.0054 -.0084 -.0008
(-.67) (-1.13) (-.10)
Married -.0551 -.0954 -.0877
(-1.09) (-2.08) (-1.80)
YoungChildren -.0518 -.0146 -.0481
(-1.26) (-.42) (-1.17)
Spouse's Income .0000 .0000 .0000
(.49) (.91) (.73)
Minority .0427 .0314 .0612
(1.08) (.90) (1.57)
Hispanic .0102 -.0074
(.17) (-.12)
Parents'Income .0008 -.0056
(.02) (.13)
JobOpportunity -.0110 -.0132
(-.32) (-.38)
FMG -.0959 .0385
(-1.17) (.66)
No Plans to Move .0016 -.0346
(.08) (-2.45)
AMAMember .0188 -.0059
(.48) (.16)
Anesthesiology .1461 .2393
(1.44) (2.54)
ObGyn -.0655 .1542
(-.54) (1.98)
Internal .0395 .1347
(.53) (2.14)
Emergency .0629 .0370
(.60) (.35)
Pediatrics .0719 .1214
(1.08) (1.91)
Radiology -.0172 .1339
(-.16) (1.58)
Pathology .0883 .0630
(.85) (.61)
Psychiatry .0049 .0252
(.06) (.31)
Surgery .0381 .1801
(.36) (2.03)
Other .1264 .2772
(1.14) (3.06)
MPU 1.0412 .8018 .8993
(2.34) (4.57) (5.77)
D .9272 .6194 .4486 .8836
(3.52) (3.01) (3.68) (3.35)
AdjustedR2 .06 .07 .07 .05
N=529

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 GENDER WAGE DISCRIMINATION
returnedto theregression,buttheestimated
Male Perceived Underpaymentis removed.
The point of these variationsis to see how
robustour general resultsare. In each varia-
tion the discriminationmeasure remains a
highlysignificant determinantoftheamount
by which women perceive theyare under-
paid. We emphasize that thisresultfollows
froman analysisof a veryspecial subset of
workersforwhichunique information isavail-
able. Determiningwhetheror not theresults
generalize to the entire labor marketmust
waitforadditionalresearch.
Table 5 presentsthe variationson Male
Perceived Underpayment.The resultsindi-
cate that men and women with the same
characteristics haveverysimilarperceptions.
SymmetricwithTable 4, the coefficienton
FPU takesa strongpositivesign. In threeof
the fourregressions,the coefficienton the
discriminationmeasureis highlysignificant.
The negativesign indicatesthatmen deem
theiractual income more acceptable when
theyreceive greaterrewardsthan those re-
ceived bywomen withthe same characteris-
tics.
The simultaneityofFPUand MPUsuggests
thatequations (10) and (11) are only a re-
duced formstructurein what should be a
jointly estimated system.For now, we are
contentto examine such reduced forms,as
our resultsare verydifferentfromthe re-
duced formresultsof others.Moreover,be-
cause (10) and (11) are estimatedon sepa-
rate subsamples,men and women, it is far
fromclear how an appropriatejoint estima-
tion would proceed.11Using a direct and
continuous measure of adequate income,
somethingothers have not done, supports
the suggestionthat both men and women
perceiveearningsdiscrimination and buildit
(each in theirownway)into theirnotionsof
earningsadequacy.
A detailed examinationof the perceived
underpayment equationsallowsa closerlook
"Although efficiencygains mightbe achieved by
ignoringthe estimatedvariablesin (10) and (11) and
simplyregressingthe underpaymenton the explana-
toryvariables,such an approach makes it difficultto
isolate the role of estimateddiscrimination.
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45
at severalsignificantcharacteristicsthatin-
fluence employees' perceptions.First,con-
sistentwith earlier findings,perceived un-
derpaymentis greater among male physi-
cians who graduated fromforeignmedical
colleges thanamong othermale physicians.
Next, the results shown for equation (2)
suggest that marriageraises the perceived
underpaymentfor men and lowers it for
women.Perhaps marriedmen and women's
notionofan inadequate income is driven,in
part, by a traditionaldefinitionof need.12
Finally,theopportunity costofforgoneearn-
ingsin an alternativecareermayaffectmen's
perceivedunderpayment, as indicatedbythe
positiverelationshipbetweenage and MPU
in equation (2). The relativelyold male phy-
sicianwhois onlynowenteringmedicalprac-
tice has likelygiven up alternativeincome
opportunitiesand considers his actual in-
come at thisperiod of his career more inad-
equate thando youngermen.
AlternativeSpecificationsof Discrimination
Three remainingissues lead to a seriesof
alternativespecifications.The firstconcern
is thatin estimatingthe individualmeasure
of gender discriminationwe mayhave con-
trolledforoccupationalspecialties-inappro-
priately,since the differencein the gender
distributionacross specialtiesmay,itself,be
the resultof discrimination.The suggestion
thatwomen have been "crowded"into spe-
cificoccupations and thatearningsin those
occupations have consequently fallen has
been made both for the labor market in
general (Ferber and Lowry1976) and for
physicianspecialtiesin particular(Hampton
1991). If physician-specialtybarriers are
sources of discriminationagainst women,
then discriminationestimatesthat take the
distributionacross specialtiesas given may
not indicate the truecorrelationbetweenD
and FPU. To investigatethispossibility,
we re-
estimatedeach of the equations in Table 4
witha newestimateofD. The newestimateis
derived fromearningsequations that omit
the specialtycontrols.
"2Formore on gender differencesin perceptionsof
earningsthatare based on need, seeJasso (1991).
46 INDUSTRIAL AND LABOR RELATIONS REVIEW
Table 6 presentsthe resultsfor the two
main variables.In each estimatethe coeffi-
cienton D remainspositiveand highlysignifi-
cant.Also in each case thecoefficienton the
estimatedMale PerceivedUnderpaymentis
also positiveand highlysignificant.Again,
the general impression is that the coeffi-
cientson thetwovariables arebothclosetoone.
The second concern has to do with the
employmentstatusof the physiciansin our
sample. As we mentionedin describingour
data, none of these physiciansare self-em-
ployed.This restriction seemsa sensibleone,
both because it is difficultto imagine the
process of discriminationamong the self-
employedand because all previousworkhas
also omittedtheself-employed. Nonetheless,
the process of choosing to workfor a firm
rather than be self-employedmay involve
unobservedfactorsthatare correlatedwith
physicians'earnings.Moreover,thesefactors
may have differentdistributionsacross the
two genders. Thus, it is possible that the
correlationspresentedin Tables 4 and 5 are
the result of not correctingthe earnings
equations thatunderlieD forself-selection.
To eliminatethe potentialforsuch bias,
we followed Heckman's (1979) correction
forsampleselectivity.Forall physiciansa first
stageprobitequation wasestimatedwithself-
employment as thedependentvariable.From
thisequation theinverseMill'sratioforthose
notself-employed wasgeneratedand included
in the separate male and female earnings
equationsthatcorrectforheteroscedasticity.
This newvariablebecame partof thevector
used tocreatea newdiscrimination
A
measure.
The new values of D foreach female physi-
cian werethenones conditionedon employ-
mentstatus.Because thisnewmethodchanges
individualvalues of D, it has the potentialto
alterthepreviouspatternofthecorrelations.
Columns5-8 ofTable 6 repeattheearlier
estimationsusing this new measure of dis-
crimination.The strongpositivepartialcor-
relationscontinue to exist.Each coefficient
differentfrom
issignificantly zero and,again,
mostare close to one. In fact,onlyone ofthe
seven coefficientsis significantly different
fromone. Thus,correctingforselectivity bias
fromemploymentstatusdoes not alter the
results.
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The finalconcern is the constructedna-
tureof the dependent variable.Such a con-
structionhas much to recommend it. The
variableis intuitivelyappealing and is clearly
understoodto representtheextentto which
women feel underpaid forwhateverreason.
Thus, the strategy of searchingfora correla-
tionwitha specificcause of underpayment,
genderdiscrimination, makessense.The dif-
ficultyis that by subtractingactual income
fromtheperceivedadequate income,we may
create a spurious correlationwith the dis-
criminationmeasure.Althoughthediscrimi-
nation measure does not include actual in-
come, itdoes include the estimatedincome.
As (9) makes clear, D is the differencebe-
tweentwoestimatedincomes,the second of
whichis thatofwomen.Thus, actual income
is part of the dependent variable and pre-
dicted income is part of the discrimination
measure.
To investigatewhetherpreviouscorrela-
tionswere spurious,we adopted an alterna-
tivetestingequation. This alternativeequa-
tionappeals somewhatless to intuition,and
a prioripredictionson thesize oftherelevant
coefficients to make. In essence,
are difficult
the perceived adequateincome standsalone
as thedependentvariableand actualincome
becomes a right-hand-side explanatoryvari-
thisformulationis consid-
able. Statistically,
ered a less restrictiveformof (10):
A A
(12) A.= BX? + a MPU + a2Du+ 5Y + e..
If in thisnew equation the a2 remainsstatis-
itis highlyunlikelythatthe
ticallysignificant,
previousresultswere an artifactof our con-
structeddependent variable.
As column 9 of Table 6 shows,the estima-
tion of (12) confirmsour earlyresults.The
measureof discriminationremainsa signifi-
cant determinantof the perceptionsof in-
come adequacy evenwhenactual income is a
separateexplanatoryvariable. 13
Acrossa varietyof specifications,the fun-
damental relationshipsremain unaltered.
"3Thisequation includes the fullset of explanatory
controls.The completeregressionsfromwhichTable 6
is takenare available fromthe authors.In general, the
patternof resultsfor the excluded variables mimics
thatin Table 4.
 GENDER WAGE DISCRIMINATION 47

Table5. Male Underpayment: D fromTable 2.

(t-Ratiosin Parentheses)
Model
Independent
Variable (1) (2) (3) (4)

Constant .1080 -.1560 .1549 .2743

(.72) (-1.20) (8.36) (2.04)
Experience -.0083 -.0014 -.0328
(-.64) (-.132) (-3.46)
Age .0034 .0077 .0032
(.84) (1.94) (.79)
Married .0123 .0487 -.0265
(.42) (1.77) (-1.00)
YoungChildren .0164 .0128 -.0028
(.76) (.717) (-.14)
Spouse's Income -.0000 _.17-6 .95-7
(-.33) (-1.65) (.96)
Minority -.0016 .0115 .0260
(-.06) (.532) (.98)
Hispanic .0031 .0011
(.09) (.03)
Parents'Income -.0037 -.0088
(-.16) (-.38)
Job Opportunity .0015 -.0065
(.08) (-.34)
FMG .1152 .1352
(3.86) (4.66)
No Plansto Move -.0188 -.0365
(-1.88) (-4.74)
AMAMember -.0191 -.0244
(-.95) (-1.22)
Anesthesiology -.0136 .0830
(-.22) (1.62)
ObGyn .1326 .1849
(2.43) (3.60)
Internal .0341 .0808
(.99) (2.68)
Emergency -.0540 -.0471
(-1.09) (-.95)
Pediatrics -.0078 .0380
(-.19) (.99)
Radiology .0915 .1487
(1.86) (3.33)
Pathology -.0509 -.0130
(-1.03) (-.27)
Psychiatry -.0037 .0070
(-.09) (.15)
Surgery .0580 .1361
(1.28) (3.83)
Other .0413 .1509
(.66) (3.10)
FPU .4169 .6955 .6078
(2.74) (8.17) (9.49)
D -.3586 -.4505 -.3425 -.0318
(-2.03) (-3.82) (-5.29) (-.24)
AdjustedR2 .08 .07 .06 .07
N = 1,343

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48 INDUSTRIAL AND LABOR RELATIONS REVIEW

Table 6. Female Underpayment: Alternative Specifications.

(t-Ratios in Parentheses)

D Without
Specialties D WithSelection Eq. 12

Description (1) (2) (3) (4) (5) (6) (7) (8) (9)

MPU 1.3695 .3122 .3863 .9712 .8523 .9356 .6369

(2.76) (3.48) (4.35) (2.65) (4.94) (5.98) (1.64)
D .8540 1.0194 .4229 1.1484 1.0735 .7660 .5074 1.1017 .5434
(2.62) (3.76) (3.10) (3.70) (4.40) (3.96) (4.24) (4.49) (2.02)
Y. .6766
(4.48)
Adj. R2 .07 .07 .05 .06 .08 .08 .07 .07 .41
N = 529

The gap between the earningswomen con- of theirearnings,indicatingthat men may

sideradequate giventheirtrainingand back-
ground and the earnings theyactuallyre-
ceive is large.This perceivedunderpayment
is largerthanthatformen,yetthesize of the
female underpaymentis highlycorrelated
withthe size of thatformen withotherwise
similarcharacteristics.Controllingfor this
correlationand forothercharacteristics, the
sizeofthefemaleunderpayment isalso highly
correlatedwithtraditionalmeasuresofearn-
ingsdiscrimination.Thus,womenappear to
build earningsdiscrimination, nearlydollar
for dollar, into their perception of being
underpaid.It is thereforeverydoubtfulthat
womenare unawareoftheearningsdiscrimi-
nationaffectingthem.
Conclusion
The most arrestingfindingfromthisex-
aminationofyoungphysicians'actual wages
and the wages theybelieve theydeserve is
that,on average,womenaccuratelyperceive
thegenderwagediscrimination againstthem
importanttobuild
and consideritsufficiently
it into theirperceptionsof what represents
adequate earnings.The positivecorrelation
betweenwage discriminationand women's
perceptionof the inadequacy of theirearn-
ingsindicatesthattheyfeelless satisfiedwith
theirrewardswhen the gender earningsdif-
ferentials wefinda nega-
increase.Conversely,
tive correlation between wage discrimina-
tionand men's perceptionoftheinadequacy
feel less satisfiedwith theirearningswhen
earningsdifferentials decrease.
Previousresearchersreportas anomalies
resultsthatfail to finda predicted positive
correlation between broad discrimination
claimsmade bywomenand measuresofwage
discrimination.We believe these resultscan
be explained in large partbecause theycon-
fusetwoquestions:first, whetherwomen ac-
curatelyperceivegender earningsdiscrimi-
nation and consider it important,and sec-
ond, whetherwomen consistentlyassociate
the broad term "discrimination"with the
narrowmeasurementof genderwage differ-
entials (as opposed to other formsof dis-
crimination,such as gender differentialsin
promotionratesand harassmenton thejob).
In thisstudywe have made use ofsurveydata
obtained from a relativelyhomogeneous
group of employees to focus on theirindi-
vidual perceptionsof the adequacy of their
earnings,and have estimatedthe portionof
the women's perceived underpaymentthat
can be explainedbytheeconomist'smeasure
ofgenderwagediscrimination. We havefound
a durable correlationbetween perceptions
ofunderpayment and measuredgenderwage
discrimination.The degree to whichour re-
sults are generalizable across occupations
and other parametersis not established,of
course;butindependentoftheanswerto the
second question above, our resultsprovide
new evidence thatwomen do perceivegen-
der wage discrimination.

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 GENDER WAGE DISCRIMINATION
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