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We analyze the role of selection bias in generating the changes in theobserved distribution of female hourly wages in the United States using CPSdata for the years 1975 to 2020. We account for the selection bias from theemployment decision by modeling the distribution of the number of working hoursand estimating a nonseparable model of wages. We decompose changes in the wagedistribution into composition, structural and selection effects. Compositioneffects have increased wages at all quantiles while the impact of thestructural effects varies by time period and quantile. Changes in the role ofselection only appear at the lower quantiles of the wage distribution. Theevidence suggests that there is positive selection in the 1970s whichdiminishes until the later 1990s. This reduces wages at lower quantiles andincreases wage inequality. Post 2000 there appears to be an increase inpositive sorting which reduces the selection effects on wage inequality.

Selection and the Distribution of Female Hourly Wages in the U.S