Expected Work Experience: A New Human Capital Measure

Abstract

This report uses commonly available data on labor force participation rates by age and gender to gauge the probability of past work experience. The data show that conventional proxies underestimate the contribution of gender differences in work experience in explaining the gender wage gap. Work experience is a key component of human capital, but data on actual work experience are rare. Potential experience, the most common proxy for actual experience, ignores labor market intermittency because of childbirth and child-rearing—a critical omission when analyzing the gender wage gap.