The lower pane of Figure 3 shows a strictly domestic decomposition of the gap between male and female wages for residents of each country, but is otherwise identical to the cross-border decomposition above. Even corrected for the greatest plausible degree of selection and natural wedges in the cross-border wage gaps, the degree of unexplained difference in wages across international borders is—for every country in the sample— dramatically greater than male-female wage gaps within countries unexplained by observables. Wage discrimination across the border generally exceeds sex discrimination within borders by an order of magnitude.

In the United States, the ratio of wages of males to those of observably identical females who are in the workforce is about 1.3.<sup>28</sup> In our sample of 42 developing countries the median domestic ratio of wages of males to observably equivalent females is 1.4 (Madagascar), a large magnitude of which explains the justifiable widespread concern about sex and gender discrimination. But for 35 of the 42 countries, estimated border discrimination estimates, _Re_ , exceeds the estimate of domestic gender discrimination. In our sample the _highest_ the ratio of wages of men to observably equivalent identical women is, perhaps not surprisingly, in Pakistan: a ratio of 3.1. For 17 of the countries we study, the effect of the US border _Re_ ≈ _Ro_ /5.1 exceeds the most egregious estimated gender discrimination.

The literature contains several regressions exploring wage gaps between workers that are observably identical except for their ethnicity, within spatially integrated labor markets. These have included measures of the gaps for black workers in the United States, scheduled castes/scheduled tribes in India, indigenous Malaysians, Indigenous Tanzanians, and indigenous Bolivians.<sup>29</sup> All of these reveal that wages in the base group exceed wages in the group discriminated against by a factor of 1.1–1.9 unexplained by characteristics. For example, the ratio of a white man’s wages to those of an observably identical black man in the United States was about 1.6 in 1939 (by 1995 it had fallen to about 1.1).<sup>30</sup> Table 7 summarizes all of this evidence on past and present domestic wage discrimination, and contrasts it with our estimates of wage discrimination across borders.

> 28 Altonji and Blank (1999) (Table 1, column 2) show that ln mean hourly wage for a full-year, full-time employed white male in 1995 is ln(17.97) = 2.89. The coefficient on female in Table 4, column 6 is –0.241, suggesting the ln mean hourly wage for an otherwise observably identical woman is 14.12, and 17.97/14.12 = 1.27

> 29 Banerjee and Knight (1991) report that in survey data collected in Delhi from October 1975 to April 1976, observably identical Indians who were not members of Scheduled Castes/Scheduled Tribes (SC/ST) earned 10.9% more than members of SC/STs (p. 185). Knight and Sabot (1991) find that in a survey of 1,000 urban Tanzanian firms in 1971, people who were not indigenous Africans (almost all of Asian ancestry) earned 87% more than observably identical indigenous Africans (p. 65). The Mincer wage regressions of Patrinos and Psacharopoulos (1993) (p. 305) indicate that a 28% wage deficit for indigenous workers relative to other workers is unexplained by differences in observable characteristics, thus 1/(1–0.28) = 1.39. Schafgans (1998) (p. 483) finds a maximum differential in wages between Chinese and Malay males unexplained by observables of 27%, thus 1/(1–0.27) = 1.37.

> 30 Altonji and Blank (1999) (Table 1, column 2) show that ln mean hourly wage for a full-year, full-time employed white male in 1995 is ln(17.97) = 2.89. The coefficient on black is –0.067, suggesting that ln mean hourly wage for an otherwise observably identical black male is 16.81, and 17.97/16.81 = 1.07. Chandra (2000) documents the substantial narrowing of the black-white wage gap between 1940 and 1990, and Heckman, Lyons, and Todd (2000) suggest that some substantial portion of the narrowing during this period remains unexplained by changes in observable characteristics other than race. Sundstrom (2007) (p. 412) conducts Mincer regressions using the 1940 US census and finds a black-white wage gap of 36% unexplained by observable characteristics in 1939 wages.

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