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Firm-specific pay premiums and the gender wage gap in 21 European countries

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  • Hennig, Jan-Luca
  • Stadler, Balazs

Abstract

We study how firm premia influence the gender wage gap for 21 European countries over 12 years. We use a quadrennial harmonized matched employer-employee data set to estimate gender-specific firm premia. Subsequently, we decompose the firm-specific wage premia differential into a within- and between-firm component. We show that, on average in Europe, the former mainly accounts for the decline in the pay gap between 2002 and 2014, while the latter does not change significantly. An analysis of the subgroups by age and gender reveals heterogeneity in the development of the components. We pay particular attention to the development of each component across the life cycle and find that the between-firm component is associated with an increase in the gender pay gap across the life cycle. The decomposition of firm premia then allows us to investigate how institutional settings relate to each component. For the within-firm component we exploit firm-level differences in the collective bargaining regime, and we link family policies to the betweenfirm component. Centralized wage bargaining is associated with higher gender wage gaps, whereas family policies enabling and encouraging women to return to the labor market after family formation reduces the between-firm component.

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  • Hennig, Jan-Luca & Stadler, Balazs, 2021. "Firm-specific pay premiums and the gender wage gap in 21 European countries," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242354, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc21:242354
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    More about this item

    Keywords

    Gender Wage Gap; Firm Premia; Decomposition; Institutional Settings;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation

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