Gender Inequality, Bargaining, and Pay in Care Services in the United States

The authors argue that paid providers of care services in the United States (in health, education, and social service industries) are less able than providers of business services to capture value-added or to extract rents because limited consumer sovereignty, incomplete information regarding quality, and large positive externalities reduce their relative market power. In addition, many care jobs enforce normative responsibility for others and require specific skills that limit cross-industry mobility. Analysis of Current Population Survey data for 2014 to 2019 reveals significant pay penalties in care services relative to business services, controlling for factors such as gender, education, occupation, and public or private employment. Women's concentration in care services explains a significant proportion of the gender wage gap and raises the possibility of significant potential benefits from industry-level bargaining strategies.