Rising wage inequality,the decline of collective bargaining,and the gender wage gap

This paper investigates the increase in wage inequality, the decline in collective bargaining, and the evolution of the gender wage gap in West Germany between 2001 and 2006. Based on detailed linked employer–employee data, we show that wage inequality is rising strongly — driven not only by real wage increases at the top of the wage distribution, but also by real wage losses below the median. Coverage by collective wage bargaining plummets by 16.5 (19.1) percentage points for male (female) employees. Despite these changes, the gender wage gap remains almost constant, with some small gains for women at the bottom and at the top of the wage distribution. A sequential decomposition analysis using quantile regression shows that all workplace related effects (firm effects and bargaining effects) and coefficients for personal characteristics contribute strongly to the rise in wage inequality. Among these, the firm coefficients effect dominates, which is almost exclusively driven by wage differences within and between different industries. Labor demand or firm wage policy related effects contribute to an increase in the gender wage gap. Personal characteristics tend to reduce wage inequality for both males and females, as well as the gender wage gap.     

A gender wage gap decomposition for matched employer–employee data

In this paper we evaluate the extent to which the gender wage gap in the Finnish manufacturing sector is attributable to within-job wage differentials, sex differences in individual qualifications, and disproportionate concentration of women in lower-paying firms and lower-paying jobs within firms. We use matched employer–employee data to compare wage differentials between similarly qualified female and male workers who are doing similar work for the same employer. Our modelling approach employs a correlated random effects specification to account for the hierarchical grouped structure of the underlying data.     

The motherhood wage gap: What about job amenities?

Women with children tend to earn lower hourly wages than women without children — a shortfall known as the ‘motherhood wage gap’. While many studies provide evidence for this empirical fact and explore several hypotheses about its causes, the impact of motherhood on job dimensions other than wages has scarcely been investigated. In order to assess changes in women's jobs around motherhood, I use data from the German Socio-Economic Panel and employ a first difference analysis. The results reveal that women when having children accommodate at their original employer primarily through adjustments in working hours. Yet, when changing the employer women adjust their jobs in several dimensions, such as different aspects of the work schedule (working hours, work at night or according to a flexible schedule) as well as the level of stress. Further analysis provides some limited support for the motherhood wage gap being explained by adjustments in the work conditions.     

Immigrant wage profiles within and between establishments

Life cycle wages of immigrants from developing countries fall short of catching up with wages of natives. Using linked employer–employee data, we show that 40% of the native–immigrant wage gap is explained by differential sorting across establishments. We find that returns to experience and seniority are similar for immigrant and native workers, but that differences in job mobility and intermittent spells of unemployment are major sources of disparity in lifetime wage growth. The inferior wage growth of immigrants primarily results from failure to advance to higher paying establishments over time. These empirical patterns are consistent with signaling disadvantages of immigrant job seekers, but not with the explanation that low wage growth follows from inferior information about employers and job opportunities.     

How to close the gender pay gap in Europe: towards the gender mainstreaming of pay policy

The European Employment Strategy includes a new commitment to a substantial reduction in the gender pay gap in European Union (EU) member states, but progress requires a radical shift away from the traditional policy emphasis on the supply‐side deficiencies of women compared with men. Mainstream theory argues that gender inequality is reduced once the pay gap is ‘adjusted’ for differences in individual characteristics (education, experience, etc.). But new empirical studies in many EU member states demonstrate that the work environment—the general wage structure, job and workplace characteristics—shapes gender pay inequality. Given the negative gender impact of trend declines in minimum wages, moves towards more decentralisation of wage‐setting and public sector restructuring, the article argues for a holistic, gender mainstreaming approach to pay policy.     

Gender gaps across the earnings distribution for full-time employees in Britain: Allowing for sample selection

This paper investigates gender differences across the log wage distributions of British employees working full-time in 2005. The raw gender wage gap shows a tendency to increase across the distribution with a glass ceiling effect indicated. A strong relationship between high skilled, white-collar occupations and carrying out managerial duties with the glass ceiling effect is indicated in the data. After allowing for positive selection into full-time employment by British women, a substantially larger gender earning gap is found: the selection corrected gender wage gap is close to twice the raw gap across most of the earnings distribution. This selection corrected gap is found to be predominantly related to women receiving lower rewards for their characteristics than men. Indeed, the results suggest the gender earnings gap would all but disappear across the earnings distribution if women working full-time received the same returns to their characteristics as men working full-time in Britain do.     

Foreign ownership,human capital,and the structure of wages in Japan

We examine the differences in the structure of wages between domestic and foreign-owned establishments in Japan. We use high-quality datasets from the Japanese government and construct a large employer–employee matched database consisting of 1 million workers in 1998. Our results confirm that foreign-owned establishments in Japan pay higher wages. We estimate that one percentage increase in foreign-ownership share of equity raises wages by 0.3%. We surmise that this foreign-ownership wage premium can be explained, at least in part, by compensating wage differentials. Workers in foreign-owned establishments are not protected by lifetime employment. They receive higher compensation for being exposed to higher risk and forfeiting their employment security. We also find that in foreign-owned establishments, wages are determined more by general skills, and less by firm-specific skills. These effects become more pronounced among establishments with a higher share of foreign ownership. The gender wage gap is considerably smaller among foreign establishments. Given the lack of long-term prospects for women in the Japanese labor market, foreign-owned establishments may be one source of ‘brain drain’ for highly skilled women there.     

Job mobility and the gender wage gap in Italy

This paper investigates the contribution of gender differences in job mobility to the emergence of a gender wage gap in the Italian labour market. We show that over the first 10 years of labour market experience job mobility accounts for up to 30% of total log wage growth for men and only 8.3% for women, and that this difference is mainly due to differences in returns to mobility. The gender mobility gap is robust to the inclusion of individual, job and firm characteristics, to different ways of accounting for individual unobserved heterogeneity, and is mainly found for voluntary job moves. Looking at the characteristics of the jobs and the firms' workers move to, we find that moves to larger firms represent by far the main source of gender differences in returns to mobility. We offer two possible explanations for this finding; one which involves differences in bargaining behaviour and one which relates to the theory of compensating differentials.     

Gender earnings gap: the role of firm specific effects

The gender earnings differential is an intensely studied issue in labour economics. However, existing studies do not examine how the wage policies of firms affect gender earnings differentials. This paper uses employer–employee linked data to address this issue. The Juhn et al. [Juhn, C., Murphy K., Pierce, B., 1991. Accounting for the slowdown in black–white wage convergence, in M.H. Kosters, ed. Workers and Their Wages, AEI Press, 107–143] decomposition methodology is extended to incorporate the decomposition of firm fixed effects. It is found that, on average, firms' wage policies are associated with a significant narrowing of the gender earnings gaps. Further analysis indicates that firms which are more likely to have narrower gender earnings gaps are those subject to strong market competition, find it easy to identify labour productivity at the individual level, and with no enterprise level wage bargaining.     

What is the most flexible component of wage bill adjustment? Evidence from Belgium

This paper decomposes wage bill changes at the firm level into components due to wage changes, and components due to flows of employment. It relies on an administrative matched employer–employee dataset of individual earnings merged with firms' annual accounts for Belgium over the period 1997–2001. The results are in line with what one would expect in a downward wage rigidity environment. On average, wage bill contractions result essentially from employment cuts in spite of wage increases. Wage growth of job stayers is moderated but positive; and wages of entrants compared with those of incumbents are no lower. The labour force cuts are achieved through both reduced entries and increased exits, due to more layoffs, especially in smaller firms, and wider use of early retirement, especially in manufacturing. In addition, the paper points out the role of overtime hours, temporary unemployment and interim workers in adapting hours worked to economic circumstances.     

Gender and competition

In almost all European Union countries, the gender wage gap is increasing across the wage distribution. In this 2008 presidential lecture I briefly survey some recent studies aiming to explain why apparently identical women and men receive such different returns and focus especially on those incorporating psychological factors as an explanation of the gender gap. Research areas with high potential returns to further analysis are identified. Several examples from my own recent experimental work with Patrick Nolen are also presented. These try to distinguish between the role of nature and nurture in affecting behavioural differences between men and women that might lead to gender wage gaps.     

A Meta‐Analysis of the International Gender Wage Gap

Abstract.  Since the early 1970s, a number of authors have calculated gender wage differentials between women and men of equal productivity. This meta‐study provides a new quantitative review of this vast amount of empirical literature on gender wage differentials as it concerns not only differences in methodology, data, and time periods, but also different countries. We place particular emphasis on a proper consideration of the quality of the underlying study which is done by a weighting with quality indicators. The results show that data restrictions – i.e. the limitation of the analysis to new entrants, never‐marrieds, or one narrow occupation only – have the biggest impact on the resulting gender wage gap. Moreover, we are able to show what effect a misspecification of the underlying wage equation – like the frequent use of potential experience – has on the calculated gender wage gap. Over time, raw wage differentials worldwide have fallen substantially; however, most of this decrease is due to better labor market endowments of females.     

The Gender Wage Gap in Europe: Job Preferences,Gender Convergence and Distributional Effects

The gender wage gap has declined over time. However, most of the remaining gap is unexplained, partly because of gender convergence in wage‐determining characteristics. In this paper, we show the degree of convergence differs substantially across Europe. In some countries, predominantly in Eastern Europe, the gender wage gap is entirely unexplained. However, in other countries, differences between the characteristics of men and women explain a relatively large proportion of the wage gap. Gender differences in job preferences contribute 10% to the wage gap, which is more than job tenure, previous employment status or field of study. The role of job preferences is particularly strong at the top of the wage distribution.     

Gender wage gap: A semi-parametric approach with sample selection correction

Sizeable gender differences in employment rates are observed in many countries. Sample selection into the workforce might therefore be a relevant issue when estimating gender wage gaps. We propose a semi-parametric estimator of densities in the presence of covariates which incorporates sample selection. We describe a simulation algorithm to implement counterfactual comparisons of densities. The proposed methodology is used to investigate the gender wage gap in Italy. We find that, when sample selection is taken into account, the gender wage gap widens, especially at the bottom of the wage distribution.     

Czech female managers and their wages

This paper examines gender gaps in employment and wages among top- and lower-level managerial employees in the Czech Republic at the time of its accession to the EU. Using both least-squares and matching-based decomposition techniques, we find the wage gap among comparable men and women to be sizeable, but quite similar across firm hierarchy levels. The key reason why the average relative wage position of female top managers is worse compared to lower-ranking female employees is that women tend not to be at the helm of the highest-paying companies. Overall, the representation of women at the top of Czech firms as well as the structure of the gender wage gap there appears quite similar to those in the US.     

Counterfactual distributions with sample selection adjustments: Econometric theory and an application to the Netherlands

Several recent papers use the quantile regression decomposition method of Machado and Mata [Machado, J.A.F. and Mata, J. (2005). Counterfactual decomposition of changes in wage distributions using quantile regression, Journal of Applied Econometrics, 20, 445–65.] to analyze the gender gap across log wage distributions. In this paper, we prove that this procedure yields consistent and asymptotically normal estimates of the quantiles of the counterfactual distribution that it is designed to simulate. Since employment rates often differ substantially by gender, sample selection is potentially a serious issue for such studies. To address this issue, we extend the Machado–Mata technique to account for selection. We illustrate our approach to adjusting for sample selection by analyzing the gender log wage gap for full-time workers in the Netherlands.     

Technology,Labour Characteristics and Wage‐productivity Gaps*

We use plant‐level employer–employee data in production functions and wage equations to examine whether wages are based on productivity. We use a stepwise procedure to find out how the results are influenced by the kind of data that is available. The models include shares of employee groups based on age, level and field of education, and sex. The gap between the age‐related wage and productivity effects increases with age. Education increases productivity, but wage under‐compensates productivity especially for those with the highest level of non‐technical education. For women the results depend greatly on the specification and method used.     

我国城镇正规就业与非正规就业工资差异的实证研究——基于分位数回归与分解的发现

本文利用2009年CHNS数据对我国城镇正规就业与非正规就业的工资差异进行实证研究,分位数回归与分解的结果表明:正规就业与非正规就业的教育回报率的差异,随工资分布由低端到高端呈现先升后降趋势,经验—工资线在正规就业与非正规就业明显不同,前者为单调递增的线性关系,后者为倒"U"形曲线关系;正规就业与非正规就业的工资差异主要是由中低端的工资差异引起的;在工资分布中低端和歧视等非市场因素是工资差异的主要原因,而在工资分布高端,工资差异主要来自于教育和经验等个人禀赋差异。     

Monopsonistic discrimination, worker turnover, and the gender wage gap

Motivated by models of worker flows, we argue in this paper that monopsonistic discrimination may be a substantial factor behind the overall gender wage gap. Using matched employer–employee data from Norway, we estimate establishment-specific wage premiums separately for men and women, conditioning on fixed individual effects. Regressions of worker turnover on the wage premium identify less wage elastic labour supply facing each establishment of women than that of men. Workforce gender composition is strongly related to employers' wage policies. The results suggest that 70–90% of the gender wage gap for low-educated workers may be attributed to differences in labour market frictions between men and women, while the similar figures for high-educated workers ranges from 20 to 70%.     

Education,Occupation and Career Expectations: Determinants of the Gender Pay Gap for UK Graduates*

Despite anti‐discrimination policies, women are paid 20% less then men in the UK. A large proportion of this wage gap is usually left unexplained. In this paper, I investigate whether the unexplained component is due to mis‐specification. Using a sample of recent UK graduates, I examine the role of choice variables (subject of study and occupation) as well as career expectations and aspirations. The evidence indicates that women are more altruistic and less career‐oriented than men. Career break expectations, for example, explain 10% of the gender wage gap in the favoured model. By omitting attitudinal variables, most studies are likely to overestimate the unexplained component of the gender wage gap. Women with a more traditional view concerning childrearing are also found to have less intensive search behaviour. Since aspirations may reflect perceived discrimination or social pressure, current legislations are unlikely to reduce the gender wage gap.