The Issue: Measuring Actual Labor Market Experience Work experience is an important source of human capital Controlling for experience is vital in studying women’s wages and the gender pay gap Also potentially important for subgroups of men or women—e.g., less educated, minorities Most data sets (eg CPS or Census) don’t collect information on actual experience

Design of the Project Goal: Examine the feasibility and importance of adding retrospective measures of actual experience to cross sectional data sets Use the PSID to: 1. Study importance of controlling for actual experience in analyzing wages of various groups 2. Compare long-term retrospective measures of experience (which can be included in cross-sectional data) to measures using annual updating

Design of Project (ctd) Use 2008 Westat Survey to study feasibility of adding experience questions to CPS-like survey: 1. Study consistency of responses 2. Estimate impact of experience on wages and the gender pay gap 3. Study accuracy of proxy responses

Results on Actual Experience and Women’s Earnings We use 1980, 1990 and 1999 PSID to compare results of wage analyses using potential experience, actual labor market experience, and actual experience disaggregated into full-time and part-time components

Work History Data: Annual Updating vs. Long Term Recall In 1976 and 1985, the PSID asked all respondents the experience questions We use women who were in the Panel each year from 1976 to 1985 We compare experience based on the 1985 questions vs. the 1976 questions with annual updating through 1985

Conclusions from the Analysis of PSID Data on Women 1. Measuring actual fulltime and part-time experience vs. potential experience is very important for analyzing women’s pay and the gender pay gap 2. Annual recall is better than long term retrospective questions, although the gain is small 3. Results so far suggest the CPS should collect retrospective data on actual and fulltime work experience in its March Annual Supplement

Westat Survey: General Features Random digit telephone survey conducted June 5-July 20, 2008 Some key questions modeled after CPS Some questions were pre-tested and refined Proxy responses were collected from a subset of respondents

Westat Survey: Conclusions Experience measures seem reasonably consistent with PSID Proxy responses are similar to actual responses Actual experience, especially disaggregated into full-time and part-time components, explains about 10% of the gender pay gap in 2008