Thus, customer discrimination theory fails to explain the combination of employment segregation and the wage differentials. However, the data points out the jobs associated with women suffer from lower pay. Edmund Phelps  introduced the assumption of uncertainty in hiring decisions. Thus, they are more likely to hire the male applicants over the females, if they believe on average men are more productive and more stable. This general view affects the decision of the employer about the individual on the basis of information on the group averages.
Blau et al. The non-neoclassical insight that is not part of the statistical discrimination sheds light onto uncertainty. If a woman is given less firm-specific training and is assigned to lower-paid jobs where the cost of her resigning is low based on the general view of women, then this woman is more likely to quit her job, fulfilling the expectations, thus to reinforce group averages held by employers.
However, if the employer invests a lot on her, the chance that she will stay is higher. This non-neoclassical model was first developed by Bergmann. The reasons for segregation may be socialization, individual decisions, or labor market discrimination. Wage differentials occur when the job opportunities or demand for the female-dominated sector is less than the supply of women.
History of the Women’s Rights Movement
According to the evidence, in general female dominated jobs pay less than male dominated jobs. The pay is low because of the high number of women who choose female dominated jobs or they do not have other opportunities. When there is no discrimination in the market and both female and male workers are equally productive, wages are the same regardless of type of the job, F or M jobs. Assume the equilibrium wages in job F is higher than that of the M jobs.
History of the Women’s Rights Movement | National Women's History Alliance
Intuitively, the workers in the less paying job will transfer to the other sector. This movement ceases only when the wages in two sectors are equal. Therefore, when the market is free of discrimination, wages are the same for different types of jobs, provided that there is sufficient time for adjustment and attractiveness of each job is the same.
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When there is discrimination in the M jobs against women workers, or when women prefer the F jobs, economic outcomes change. When there is a limit of available M jobs, its supply decreases; thus, wages of the M jobs increase. Consequently, higher supply of F jobs decreases its wage rates. Briefly, segregation causes the gender wage differentials regardless of the equal skills. Another striking point of overcrowding model is productivity. Since women in the F jobs cost less it is rational to substitute labor for capital. On the contrary, it is rational to substitute capital for labor in the M jobs.
Therefore, overcrowding causes wage differentials and it makes women less productive although they were potentially equally productive initially. The question of why women prefer working in female-dominated sectors is an important one. Some advocate this choice stems from inherently different talents or preferences; some insist it is due to the differences in socialization and division of labor in the household ; some believe it is because of discrimination in some occupations.
Institutional models of discrimination indicate labor markets are not as flexible as it is explained in the competitive models. Rigidities are seen in the institutional arrangements, or in the monopoly power. Race and gender differences overlap with labor market institutions. Women occupy certain jobs as versus men. Thus, institutional models do not subscribe to the neoclassical definition of discrimination.
The firms hire workers outside or use internal workforce based on worker progress, which plays a role in climbing the promotion ladder. Big firms usually put the workers into groups in order to have similarity within the groups. When employers think certain groups have different characteristics related to their productivity, statistical discrimination may occur. Consequently, workers might be segregated based on gender and race. Peter Doeringer and Michael Piore  established the dual labor market model. On the contrary, secondary jobs are the ones with less skill requirement, lower wages, less promotion opportunities and higher labor turnover.
The dual labor market model combined with the gender discrimination suggests that men dominate the primary jobs and that women are over-represented in the secondary jobs. The difference between primary and secondary jobs also creates productivity differences, such as different level of on-the-job training.
Moreover, women have lower incentives for stability since benefits of secondary jobs are less. Moreover, lack of informal networking from male colleagues, visualizing women in the female dominated jobs and lack of encouragement do affect the economic outcomes for women. They are subject to unintentional institutional discrimination, which alters their productivity, promotion, and earnings negatively.
The other argument is about barriers that prevent women from advance positions. However, some of these barriers are non-discriminatory. Work and family conflicts is an example of why there are fewer females in the top corporate positions. Yet, both the pipeline and work-family conflict together cannot explain the very low representation of women in the corporations. Discrimination and subtle barriers still count as a factor for preventing women from exploring opportunities. Moreover, it was found out that when the chairman or CEO of the corporation was a woman, the number of women working in the high level positions and their earnings increased around percent.
The findings indicate women executives earn 45 percent less than male executives based on the 2. Some of the gap is due to seniority, yet mostly it was because of the under-representation of women in CEO , chair or president positions and the fact that women managed smaller companies. Non-neoclassical economists point out subtle barriers play a huge role in women's disadvantage.
These barriers are difficult to document and to remove.
For instance, women are left out of male's network. Moreover, the general perception is men are better at managing others, which is seen in the Catalyst's Fortune survey. The 40 percent of women executives said that they believed man had difficulty when they were managed by women. Neoclassical economics ignores logical explanations of how self-fulfilling prophecy by the employers affect the motivation and psychology of women and minority groups and thus it alters the decision making of individuals regarding human capital.
Moreover, power and social relationships link discrimination to sexism and racism, which is ignored in the neoclassical theory.
Furthermore, along with the classical and Marxist theory of competition, racial-gender structure of the job is related to the bargaining power and thus wage differential. Therefore, discrimination persists since racial and gender characteristics shape who gets the higher paying jobs, both within and between occupations. In short, the power relationships are embedded in the labor market, which are neglected in the neoclassical approach. In addition, critics have argued that the neoclassical measurement of discrimination is flawed. As a result, we are not informed about the causes and nature of discrimination.
She argues that gender and race should not be marginal to the analysis but at the center and suggests a more dynamic analysis for discrimination. Figart argues gender is more than a dummy variable since gender is fundamental to the economy. Moreover, the segmentation in the labor market, institutional variables and non-market factors affect wage differentials and women dominate low-paid occupations.
Again, none of these is because of productivity differentials nor are they the outcome of voluntary choices. Figart also indicates how women's jobs are associated with unskilled work. Although empirical evidence is a tool to use to prove discrimination, it is important to pay attention to the biases involved in using this tool. The biases might cause under or over-estimation of labor market discrimination. There is lack of information on some individual qualifications which indeed affect their potential productivity.
The factors such as motivation or work effort, which affects incomes, are difficult to be scaled. Moreover, information regarding the type of college degree may not be available.
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In short, all the job qualification related factors are not included to study gender wage gap. An example for underestimation is the feedback effect of labor market discrimination.