MEASUREMENT ERROR IN JOB EVALUATION AND THE GENDER WAGE GAP

Job evaluation is used to establish pay for more than half of the workers in the United States. It is also the key tool used in establishing the extent of pay bias in firm pay systems. However, job evaluations are subject to measurement error that can bias estimates of the magnitude of pay discrimination. A practical procedure for making these corrections is outlined. Using computed reliability ratios to adjust for measurement error in a study of state government jobs, we find that measurement errors exaggerate the implied extent of discrimination against predominantly female jobs by 34 % to 44%. Measurement errors also exaggerate the number of independent job factors which affect pay. 1 Wage equations are widely used to estimate the size of the pay gap between male- and female-dominated jobs. When jobs are the unit of observation, job wage rates are regressed on job attributes (such as skill, effort, responsibility, and working conditions) and on the percent of female incumbents in the job. The coefficient on the percent female variable estimates the size of the gender pay gap, which is often taken as a measure of pay discrimination against women. 1 These estimates frequently become the metric for upward adjustment of female-dominated job pay to redress the discrimination. Summarizing the research which uses jobs as the unit of