I limited myself to full-year private sector workers with a bachelors degree who were ages 21 to 26 in 2009-2010. Within this group I controlled for age, race, Hispanic and immigrant status, detailed geographic location, weekly work hours, college major and occupation. Controlling for college major accounts for the fact that men tend to choose majors that lead to higher earnings later in life. Controlling for occupation captures “compensating wage differentials” for positive or negative aspects of the job. For instance, dangerous or unpleasant jobs may pay more, while jobs offering flexible hours or more generous benefits might pay less. Including all these controls, the gender pay gap for young college grads drops to around 1 percent.

Even then, do my results mean that discrimination reduces pay by 1 percent? Hardly. It’s well known that women negotiate over pay less aggressively than men. Better negotiating tactics could easily generate a 1 percent pay difference. More broadly, the 1 percent figure denotes the unexplained pay difference – simply because the data we have can’t explain it doesn’t mean the difference is due to discrimination. Better data might explain even more of the difference. Moreover, even if discrimination exists – and it surely does, even if its overall effects aren’t huge – the cure of greater government control over the labor market might be worse than the disease.

via The gender pay gap is a media myth | AEIdeas.