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German Wage Underpayment: An Investigation into Labor Market Inefficiency and Discrimination

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  • Peter Dawson
  • Timothy Hinks
  • Duncan Watson

Abstract

Using stochastic panel wage frontiers, this paper estimates the relative underpayment of females and males in the reunified Germany. The estimates are initially applied to discrimination analysis. It finds that females have higher underpayment and that the male-female differential increased over the period 1991-1993. However, the paper suggests that the estimates of underpayment reflect other concerns, such as dynamic monopsony. Labor market inefficiency must be taken into account before discrimination analysis is possible.

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File URL: http://ejournals.duncker-humblot.de/doi/pdf/10.3790/vjh.70.1.107
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Bibliographic Info

Article provided by DIW Berlin, German Institute for Economic Research in its journal Vierteljahrshefte zur Wirtschaftsforschung.

Volume (Year): 70 (2001)
Issue (Month): 1 ()
Pages: 107-114

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Handle: RePEc:diw:diwvjh:70-10-16

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  1. Jennifer Hunt, 2001. "Post-Unification Wage Growth in East Germany," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 190-195, February.
  2. Juster, F. Thomas & Stafford, Frank P., 1990. "The Allocation of Time: Empirical Findings, Behavioural Models, and Problems of Measurement," Working Paper Series 258, Research Institute of Industrial Economics.
  3. Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990. "Production frontiers with cross-sectional and time-series variation in efficiency levels," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 185-200.
  4. Nickell, Stephen & Bell, Brian, 1996. "Changes in the Distribution of Wages and Unemployment in OECD Countries," American Economic Review, American Economic Association, vol. 86(2), pages 302-08, May.
  5. Knut Gerlach, 1987. "A Note on Male-Female Wage Differences in West Germany," Journal of Human Resources, University of Wisconsin Press, vol. 22(4), pages 584-592.
  6. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  7. Jennifer Hunt, 1997. "The Transition in East Germany: When is a Ten Point Fall in the Gender Wage Gap Bad News?," NBER Working Papers 6167, National Bureau of Economic Research, Inc.
  8. David Neumark, 1987. "Employers' discriminatory behavior and the estimation of wage discrimination," Special Studies Papers 227, Board of Governors of the Federal Reserve System (U.S.).
  9. Hofler, Richard A & Murphy, Kevin J, 1992. "Underpaid and Overworked: Measuring the Effect of Imperfect Information on Wages," Economic Inquiry, Western Economic Association International, vol. 30(3), pages 511-29, July.
  10. Bergmann, Barbara R, 1981. "The Economic Risks of Being a Housewife," American Economic Review, American Economic Association, vol. 71(2), pages 81-86, May.
  11. Black, B & Trainor, M & Spencer, J E, 1999. "Wage Protection Systems, Segregation and Gender Pay Inequalities: West Germany, the Netherlands and Great Britain," Cambridge Journal of Economics, Oxford University Press, vol. 23(4), pages 449-64, July.
  12. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
  13. Lechner, Michael, 1999. "Earnings and Employment Effects of Continuous Off-the-Job Training in East Germany after Unification," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(1), pages 74-90, January.
  14. Mick Brookes & Timothy Hinks & Duncan Watson, 2001. "Comparisons in Gender Wage Differentials and Discrimination between Germany and the United Kingdom," LABOUR, CEIS, vol. 15(3), pages 393-414, 09.
  15. Duncan Watson, 2000. "UK wage underpayment: implications for the minimum wage," Applied Economics, Taylor & Francis Journals, vol. 32(4), pages 429-440.
  16. Dijk, Jouke van, 1998. "Differences in underemployment between the United States and the Netherlands," Research Report 98D26, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
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Cited by:
  1. Ma Ángeles Díaz & Rosario Sánchez, 2011. "Gender and potential wage in Europe: a stochastic frontier approach," International Journal of Manpower, Emerald Group Publishing, vol. 32(4), pages 410-425, July.

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