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The gender wage gap – due to differences in efficiency wage effects or discrimination?

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Author Info
Schwieren,Christiane (METEOR)
Abstract

Women often receive lower wages than men for comparable work. Many explanations are offered for this fact, ranging from women’s lower negotiation skills to discrimination by employers. In this paper, an experiment, which was originally conceptualized to test efficiency-wage theory, has been applied to test whether women get paid less than men in an experimental market, and if this is the case, why. The experiment is a variant of Fehr & Falk’s (1999) double auction with effort. Results are striking: Female workers receive significantly lower wages than male workers, no matter whether men or women are in the role of the firm. However, this does not pay for the firms, as women’s reactions to low wages are equal to those of men: low effort. More specifically, a high discrepancy between the wage asked by a worker and the wage offered by the firm leads to low effort. Extrapolating from the experiment to the “real” labor market, the results are pointing towards a vicious cycle: Women are offered lower wages than they expect, and consequentially they exhibit low effort levels. Therefore, employers who do not realize that women – just like men – reciprocate might regard their productivity as lower.

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Paper provided by Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization in its series Research Memoranda with number 046.

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Date of creation: 2003
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Handle: RePEc:dgr:umamet:2003046

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Keywords: labour economics ;

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  1. Viscusi, W Kip, 1980. "Sex Differences in Worker Quitting," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 388-98, August. [Downloadable!] (restricted)
  2. Haagsma, Rein, 1993. "Is statistical discrimination socially efficient?," Information Economics and Policy, Elsevier, vol. 5(1), pages 31-50, January. [Downloadable!] (restricted)
  3. Francine D. Blau, 1990. "Career Plans and Expectations of Young Women and Men: The Earnings Gap and Labor Force Participation," NBER Working Papers 3445, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Walters, Amy E. & Stuhlmacher, Alice F. & Meyer, Lia L., 1998. "Gender and Negotiator Competitiveness: A Meta-analysis," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(1), pages 1-29, October. [Downloadable!] (restricted)
  5. Deborah Anderson & David Shapiro, 1996. "Racial differences in access to high-paying jobs and the wage gap between black and white women," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 49(2), pages 273-286, January.
  6. Francine D. Blau & Lawrence M. Kahn, 2000. "Gender Differences in Pay," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 75-99, Fall. [Downloadable!] (restricted)
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  7. Ernst Fehr & Armin Falk, 1999. "Wage Rigidity in a Competitive Incomplete Contract Market," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 106-134, February. [Downloadable!] (restricted)
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  8. Christoph Meng, 2002. "(Fe)male Jobs and (Fe)male Wages: Disentangling the Effect of Personal and Job Characteristics on Wages by Measuring Stereotypes," Brussels Economic Review/Cahiers Economiques de Bruxelles, Editions du DULBEA, Université libre de Bruxelles, Department of Applied Economics (DULBEA), vol. 45(2), pages 143-167.
  9. Fortin, N.M. & Lemieux, T., 1996. "Rank Regressions, Wage Distributions and the Gender Gap," Cahiers de recherche 9607, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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  10. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Working Papers 1906, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Kenneth Arrow, 1971. "The Theory of Discrimination," Working Papers 403, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  12. Francine D. Blau & Larry M. Kahn, 1981. "Race and sex differences in quits by young workers," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 34(4), pages 563-577, July.
  13. Blau, Francine D & Kahn, Lawrence M, 1994. "Rising Wage Inequality and the U.S. Gender Gap," American Economic Review, American Economic Association, vol. 84(2), pages 23-28, May. [Downloadable!] (restricted)
  14. Light, Audrey & Ureta, Manuelita, 1992. "Panel Estimates of Male and Female Job Turnover Behavior: Can Female Nonquitters Be Identified?," Journal of Labor Economics, University of Chicago Press, vol. 10(2), pages 156-81, April. [Downloadable!] (restricted)
  15. R. Lynn Hannan & John H. Kagel & Donald V. Moser, 2002. "Partial Gift Exchange in an Experimental Labor Market: Impact of Subject Population Differences, Productivity Differences, and Effort Requests on Behavior," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 923-951, October. [Downloadable!]
  16. Sheryl Ball & Catherine Eckel & Philip J. Grossman & William Zame, 2001. "Status In Markets," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 161-188, February. [Downloadable!] (restricted)
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