Empirical Issues In Measuring The Returns To Female Labor Market Experience

Abstract

This paper assesses the empirical properties of two labor market experience measures for female workers in the United States. Our results confirm that the conventional cross-sectional measure of labor market experience, often referred to as potential experience, is an upwardly-biased estimate of the true labor market experience of women -- since women are more likely to experience periods of intermittent labor force participation. This bias yields inconsistent estimates of the returns to female labor market experience. We also present corrected returns to female labor market experience based on longitudinal work history information.