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What is the Role of Firm-Specific Pay Policies on the Gender Earnings Gap in Canada?

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  • Jiang Li
  • Benoit Dostie
  • Gäelle Simard-Duplain

Abstract

Using data from the Canadian Employer-Employee Dynamics Database between 2001 and 2015, we examine the impact of firms’ hiring and pay-setting policies on the gender earnings gap in Canada. Consistent with the existing literature and following Card, Cardoso, and Kline (2016), we find that firm-specific premiums explain nearly one quarter of the 26.8% average earnings gap between female and male workers. On average, firms’ hiring practices – due to difference in the relative proportion of women hired at high-wage firms, or sorting – and pay-setting policies – due to differences in pay by gender within similar firms – each explain about one half of this firm effect. The compositional difference between the two channels varies substantially over the life-cycle, by parental and marital status, and across provinces.

Suggested Citation

  • Jiang Li & Benoit Dostie & Gäelle Simard-Duplain, 2020. "What is the Role of Firm-Specific Pay Policies on the Gender Earnings Gap in Canada?," CIRANO Working Papers 2020s-67, CIRANO.
    • Handle: RePEc:cir:cirwor:2020s-67
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    Cited by:

    1. Christopher Neilson & Federico Huneeus & Conrad Miller & Seth Zimmerman, 2021. "Firm Sorting, College Major, and the Gender Earnings Gap," Working Papers 649, Princeton University, Department of Economics, Industrial Relations Section..
    2. Serdar Birinci & Youngmin Park & Thomas Pugh & Kurt See, 2023. "Uncovering the Differences among Displaced Workers: Evidence from Canadian Job Separation Records," Working Papers 2023-022, Federal Reserve Bank of St. Louis, revised Oct 2023.
    3. Li, Jiang & Dostie, Benoit & Simard-Duplain, Gaëlle, 2020. "What Is the Role of Firm-Specific Pay Policies on the Gender Earnings Gap in Canada?," IZA Discussion Papers 13907, Institute of Labor Economics (IZA).
    4. Masso, Jaan & Meriküll, Jaanika & Vahter, Priit, 2022. "The role of firms in the gender wage gap," Journal of Comparative Economics, Elsevier, vol. 50(2), pages 454-473.

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    More about this item

    Keywords

    Gender Wage Gap; Firm Effects; Marital Status; Linked Employer-Employee Data; Pay-Setting; Sorting;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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