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Does Comparable Worth Work in a Decentralized Labor Market?

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  • Michael Baker
  • Nicole M. Fortin

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Abstract

We investigate the effect of pro-active comparable worth legislation covering both the public and private sectors on wages, the gender wage gap and the gender composition of employment. The focus is the pay equity initiative of the Canadian province of Ontario in the early 1990s. We document substantial lapses in compliance and problems with the implementation of the law among smaller firms where the majority of men and women work. This evidence provides important lessons of the obstacles to extending pay equity to the private sector of a decentralized labor market. When we focus on those sectors of the labor market where compliance was relatively strict, our results suggest that any positive effects on the wages of women in female jobs were very modest. Out most consistently estimated effects of the law on wages are negative: slower wage growth for women in male jobs and for men in female jobs. Dans cet article, nous étudions les effets d'une loi d'équité salariale proactive, qui s'applique à la fois au secteur public et au secteur privé, sur les salaires, le rapport entre le salaire moyen des femmes et des hommes et la féminité des emplois. Cette initiative législative a été mise en oeuvre dans la province canadienne de l'Ontario au début des années quatre-vingt-dix. Nous documentons plusieurs défaillances dans le respect de la loi, ainsi que les problèmes d'implémentation de la loi dans les petites et moyennes entreprises qui emploient une majorité d'hommes et de femmes. Cela nous permet de tirer des leçons importantes quant aux obstacles rencontrés dans l'application de l'équité salariale dans une économie décentralisée. Lorsque nous nous concentrons sur les secteurs du marché du travail où la loi a été le plus respectée, nos résultats indiquent que les effets positifs sur les salaires des femmes occupant des emplois féminins sont très minces. Nos résultats les plus robustes quant aux effets de la loi sur les salaires sont plutôt négatifs: celle-ci aurait ralenti la croissance des salaires des femmes occupant des emplois masculins et des hommes occupant des emplois féminins.

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Bibliographic Info

Paper provided by CIRANO in its series CIRANO Working Papers with number 2000s-49.

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Date of creation: 01 Oct 2000
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Handle: RePEc:cir:cirwor:2000s-49

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Keywords: Pay equity; comparable worth; pro-active pay equity plans; Ontario; enforcement and compliance; Équité salariale; salaire égal pour travail de valeur comparable; programmes d'équité pro-actifs; Ontario; mise en vigueur et respect des lois;

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  1. Orley Ashenfelter & Robert Smith, 1977. "Compliance with the Minimum Wage Law," Working Papers 478, Princeton University, Department of Economics, Industrial Relations Section..
  2. Nicole M. Fortin & Michael Baker, 1999. "Women's Wages in Women's Work: A U.S./Canada Comparison of the Roles of Unions and "Public Goods" Sector Jobs," American Economic Review, American Economic Association, vol. 89(2), pages 198-203, May.
  3. Jeff Borland, 1999. "The Equal Pay Case-Thirty Years On," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(3), pages 265-272.
  4. Judith A. McDonald & Robert J. Thornton, 1998. "Private-Sector Experience with Pay Equity in Ontario," Canadian Public Policy, University of Toronto Press, vol. 24(2), pages 185-208, June.
  5. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
  6. Orazem, Peter F & Mattila, J Peter, 1990. "The Implementation Process of Comparable Worth: Winners and Losers," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 134-52, February.
  7. O'Neill, June & Brien, Michael & Cunningham, James, 1989. "Effects of Comparable Worth Policy: Evidence from Washington State," American Economic Review, American Economic Association, vol. 79(2), pages 305-09, May.
  8. Kimberly Bayard & Judith Hellerstein & David Neumark & Kenneth Troske, 2003. "New Evidence on Sex Segregation and Sex Differences in Wages from Matched Employee-Employer Data," Journal of Labor Economics, University of Chicago Press, vol. 21(4), pages 887-922, October.
  9. Bergmann, Barbara R, 1989. "Does the Market for Women's Labor Need Fixing?," Journal of Economic Perspectives, American Economic Association, vol. 3(1), pages 43-60, Winter.
  10. Macpherson, David A & Hirsch, Barry T, 1995. "Wages and Gender Composition: Why Do Women's Jobs Pay Less?," Journal of Labor Economics, University of Chicago Press, vol. 13(3), pages 426-71, July.
  11. Perry C. Beider & B. Douglas Bernheim & Victor R. Fuchs & John B. Shoven, 1986. "Comparable Worth in a General Equilibrium Model of the U.S. Economy," NBER Working Papers 2090, National Bureau of Economic Research, Inc.
  12. Ehrenberg, Ronald G & Smith, Robert S, 1987. "Comparable-Worth Wage Adjustments and Female Employment in the State and Local Sector," Journal of Labor Economics, University of Chicago Press, vol. 5(1), pages 43-62, January.
  13. Johnson, George & Solon, Gary, 1986. "Estimates of the Direct Effects of Comparable Worth Policy," American Economic Review, American Economic Association, vol. 76(5), pages 1117-25, December.
  14. Killingsworth, Mark R, 1987. "Heterogeneous Preferences, Compensating Wage Differentials, and Comparable Worth," The Quarterly Journal of Economics, MIT Press, vol. 102(4), pages 727-42, November.
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Cited by:
  1. Nicole M. Fortin & Michael Huberman, 2002. "Occupational Gender Segregation and Women's Wages in Canada: An Historical Perspective," Canadian Public Policy, University of Toronto Press, vol. 28(s1), pages 11-39, May.

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