GENDER PAY GAPS IN THE FORMER SOVIET UNION: A REVIEW OF THE EVIDENCE

The goal of this paper is to examine the patterns and movements of the gender pay gaps in the countries of the former Soviet Union (FSU) and to place them in the context of advanced economies. We survey over 30 publications and conduct a meta‐analysis of this literature. Gender pay gaps in the region are considerable and above the levels observed in advanced economies. Similar to advanced economies, industrial and occupational segregation widen the gaps in the FSU countries, whereas gender differences in educational attainment tend to shrink them. However, a much higher proportion of the gaps remains unexplained, pointing toward the role of unobserved gender differences related to actual and perceived productivity. Over the last 25 years, the gaps contracted in most FSU countries, primarily due to the reduction in the unexplained portion. Behind the contraction at the mean are different movements in the gap across the pay distribution. Although the glass‐ceiling effect has diminished in some FSU countries, it has persisted in others. We investigate the reasons underlying these findings and argue that the developments in the FSU region shed new light on our understanding of the gender pay gaps.     

PERFORMANCE-RELATED PAY AND THE PROSPECTS FOR GENDER PAY EQUITY

Equal pay for work of equal value has come to be almost inextricably associated with the application of job evaluation. Current trends towards performance-related pay systems pose a potential threat to the pursuit of greater gender pay equality as discretion in pay determination increases and there is no clear relationship between earnings and job grade. This paper examines the basis for this view drawing upon the now widespread literature and research into performance-related pay. the argument is made that the problem for gender equality lies both in the nature of the payment system and in the context in which it is being applied, including the changes in the nature of employment relationships that are accompanying these developments. While some women may benefit, overall the moves towards a widening income dispersion and the increased importance of management discretion and appraisal are likely to disadvantage women. However, the individualization of pay is likely to lead to further fragmentation of the interests of women, reducing the likelihood of collective resistance. Opportunities to monitor pay trends will also decrease as the spread of performance-related pay reduces the transparency of the labour market.     

Explaining cross-racial differences in teenage labor force participation: Results from a two-sided matching model

White teenagers are substantially more likely to search for employment than black teenagers. This differential occurs despite the fact that, conditional on race, individuals from disadvantaged backgrounds are more likely to search. While the racial wage gap is small, the unemployment rate for black teenagers is substantially higher than that of white teenagers. We develop a two-sided search model where firms are partially able to search on demographics. Model estimates reveal that firms are more able to target their search on race than on age. Employment and wage outcome differences explain half of the racial gap in labor force participation rates.     

The family gap in wages: What wombmates reveal

We shed new light on the effects of having children on hourly wages by exploiting access to data on the entire population of employed same-sex twins in Denmark. Our second contribution is the use of administrative data on absenteeism; the amount of hours off due to holidays and sickness. Our results suggest that childbearing reduces female hourly wages but the principal explanation is in fact mothers’ higher levels of absence. We find a positive wage premium for fathers.     

TOWARDS AN ALGORITHMIC REVOLUTION IN ECONOMIC THEORY

Abstract This is an attempt to tell a coherent story of a possible path towards an algorithmic revolution in economic theory, based on foundational debates in mathematics. First, by exposing the non‐computational content of classical mathematics, and its foundations, it is shown that both set theory and the tertium non datur can be dispensed with, as foundational concepts. Next, then, as a natural sequel, it follows that every kind of economic theory that bases its theoretical underpinning on classical mathematics can be freed from these foundations and can be made naturally algorithmic. This will make the subject face, in an all pervasive way, absolutely (algorithmically) undecidable decision problems. The thrust of the path towards an algorithmic revolution in economics lies, then, in pointing out that only a radically new mathematical vision of microeconomics, macroeconomics, behavioural economics, game theory, dynamical systems theory and probability theory can lead us towards making economic theory a meaningfully applied science and free of mysticism and subjectivism.     

Work out or out of work — The labor market return to physical fitness and leisure sports activities

This study is the first to present evidence of the return to leisure sports in the job hiring process by sending fictitious applications to real job openings in the Swedish labor market. In the field experiment job applicants were randomly given different information about their type and level of leisure sports. Applicants who signaled sports skills had a significantly higher callback rate of about 2 percentage points, and this effect was about twice as large for physically demanding occupations.Additional evidence of a sports premium in the regular labor market is arrived at when analyzing the long-run impact of physical fitness on later labor market outcomes. The analysis uses register data on adult earnings and physical fitness when enlisting at age 18. The fitness premium, net of unobservable family variables, is in the order of 4-5%, but diminishes to 2% when controlling for non-cognitive skills.     

Matching,Reallocation and Changes in Earnings Dispersion*

The ‘fractal’ nature of the rise in earnings dispersion is one of its key features. In this paper, we offer a new perspective on the causes of changes in earnings dispersion, focusing on the role of labour reallocation. We set out a framework showing that job and worker reallocation affects earnings dispersion. We quantify this using a data set comprising almost the universe of workers and employers in Maryland. The changing allocation of workers to jobs played a significant role in explaining movements in the dispersion of earnings.     

Shifts in the Demand and Supply of Skills in the OECD: A Single‐Index Model with a Continuous Distribution of Skills*

This paper proposes a one‐dimensional index for the gap between the demand and supply of skills; this index can be estimated based on the labour market performance of groups defined with characteristics (e.g. education) that are only imperfectly correlated with labour market skills. Using data from five European countries and the US, we find that the relative demand for skills has increased more than the relative supply in the US and UK during the 1980s but not in other European countries. However, the gap between relative demand and supply increased in Italy and the Netherlands from the early 1990s.     

Preferences,Comparative Advantage,and Compensating Wage Differentials for Job Routinization*

I attempt to explain why there is not much evidence on compensating wage differentials for job disamenities. I focus on the match between workers’ preferences for routine jobs and the variability in tasks associated with the job. Using data from the Wisconsin Longitudinal Study, I find that mismatched workers earn lower wages and that both male and female workers in routinized jobs earn, on average, 5.5% and 7% less than their counterparts in non‐routinized jobs. However, once preferences and mismatch are accounted for, this difference decreases to 2% for men, and 4% for women, not statistically significant in both cases.     

Wage Formation,Regional Migration and Local Labour Market Tightness*

Empirical studies of regional wage formation and interregional migration routinely include the regional unemployment rate as indicator of local labour market tightness. However, these studies are usually motivated by economic theories that emphasize transition probabilities between unemployment and employment, and the unemployment rate is an imperfect proxy for these probabilities. We use a large micro data set to compute estimates of the rate of outflow from unemployment for 90 Norwegian travel‐to‐work areas. The outflow rates perform better than traditional measures of regional labour market tightness in panel data analyses of regional wages and interregional migration.     

Further Analysis of the Returns to Academic and Vocational Qualifications*

This paper uses data from the Labour Force Survey over the period 1996–2002 to investigate the returns to a detailed list of academic and vocational qualifications. In particular, the analysis focuses on how these returns have varied over the time period considered, how the returns vary over an individual's lifetime using a pseudo cohort analysis, and how the returns vary according to the highest level of qualification obtained at school.     

Performance Pay,Union Bargaining and Within‐Firm Wage Inequality*

Theory predicts that performance pay boosts wage dispersion. Workers retain a share of individual productivity shocks and high‐efficiency workers receive compensation for greater effort. Collective bargaining can mitigate the effect of performance pay on wage inequality by easing monitoring of common effort standards and group‐based pay schemes. Analyses of longitudinal employer–employee data show that the introduction of performance‐related pay raises wage inequality in non‐union firms, but not in firms with high union density. Although performance‐related pay appears to be on the rise, the overall impact on wage dispersion is likely to be small, particularly in European countries with influential unions.     

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.     

How Does Education Affect the Earnings Distribution in Urban China?*

It is widely believed that investing in education could be an effective strategy to promote higher standards of living and equity. We empirically assess this claim by estimating returns to education across the whole earnings distribution in urban China and find supporting evidence. In particular, we find that returns to education are more pronounced for individuals in the lower tail of the distribution than for those in the upper tail and that returns to education are uniformly larger for women than men. We also find that returns to education increased over time across the whole earnings 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.     

New evidence of salary discrimination in major league baseball

Salary discrimination in MLB has largely been discarded as a research topic. However traditional quantitative methods (particularly least squares regression) have concentrated on the effect of race for the average player. If only a particular salary class of players are subject to discrimination, or if the size of the discrimination is small at the average, then least-squares techniques will struggle to identify discrimination. I use quantile regression to uncover salary discrimination against black players in the lower half of the salary distribution. Not only are the premia for white and Hispanic players statistically significant, but they are large: up to 25% of salary for the bottom quintile of players.