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Several studies find that there is little sex gap in wages at labor market entry, and that the sex gap in wages emerges (and grows) with time in the labor market. This evidence is consistent with (i) there is little or no sex discrimination in wages at labor market entry, and (ii) the emergence of the sex gap in wages with time in the labor market reflects differences between women and men in human capital investment (and other decisions), with women investing less early in their careers. Indeed, some economists explicitly interpret the evidence this way. We show that this interpretation ignores two fundamental implications of the human capital model, and that differences in investment can complicate the interpretation of both the starting sex gap in wages (or absence of a gap), and the differences in “returns” to experience. We then estimate stylized structural models of human capital investment and wage growth to identify the effects of discrimination (or other sources of a starting pay gap) and differences in human capital investment.

We analyze and assess new evidence on employment dynamics from a new data source – the National Establishment Time Series (NETS). The NETS offers advantages over existing data sources for studying employment dynamics, including tracking business establishment relocations that can contribute to job creation or destruction on a regional level. Our primary purpose in this paper is to assess the reliability of the NETS data along a number of dimensions, and we conclude that it is a reliable data source although not without limitations. We also illustrate the usefulness of the NETS data by reporting, for California, a full decomposition of employment change into its six constituent processes, including job creation and destruction stemming from business relocation, which has figured prominently in policy debates but on which there has been no systematic evidence.

Context is known to affect evaluation for many goods. For example, a house of any given size is more likely to be viewed as adequate the larger it is relative to other houses in the same locale. If evaluations of some goods are more sensitive to context than others, there is no presumption that privately optimal consumption patterns will be socially optimal. Rather, consumers will spend too much on goods whose evaluations depend most strongly on context and too little on those whose evaluations depend least strongly on context. For instance, if evaluations of houses are more sensitive to context than evaluations of leisure, then people will spend too much money on houses and too little time with family and friends. But if context sensitivity is the same for all goods, no distortions result.

This paper suggests theoretical grounds for expecting context sensitivity to differ across goods. Evaluations should be more sensitive to context for goods whose consumption is more readily observed by others and also for goods for which relative consumption is linked to other important payoffs. The quality of school that a child attends, for example, is often strongly linked to its parents’ relative expenditures on housing.

A survey of empirical evidence suggests that observed differences in context sensitivity track the differences predicted on theoretical grounds.