Sex, Wages, and Productivity: An Empirical Analysis of Israeli Firm-Level Data

Sex discrimination in labor markets may generate a wage gap between men and women that exceeds any gap in marginal productivity. We test for this type of discrimination using unique firm-level data on manufacturing firms in Israel. There is a statistically significant negative association between wages and the proportion of a firm's workforce that is female. However, there is also a statistically significant negative association between marginal productivity and the proportion of females. The difference beween the wage and productivity gaps is small relative to wage-regression estimates of wage discrimination, and is not statistically significant, which is most consistent with no discrimination.