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Male-Female Wage and Productivity Differentials: A Structural Approach Using Japanese Firm-Level Panel Data

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Daiji Kawaguchi

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Abstract

In an attempt to explain male-female wage differential, I estimated the relative marginal productivity and relative wage of female workers compared to those of male workers using panel data of Japanese firms. The relative wage of female workers is also estimated from the same data. Cross-sectional estimates that neglect firm-level, fixed effects indicate that the marginal productivity of female workers is 44 percent of that of male workers, while female wage is 31 percent of that of male workers. These estimates indicate that part of the wage differential cannot be explained by the productivity differential. However, the IV estimates that allow for firm-level, fixed effects indicate that both female marginal productivity and wage are about 50 percent of those of male workers. Thus we cannot reject the null hypothesis of no discrimination against female workers once the selection of workers into productive and high paying firms is accounted for. Evidence found in this study is consistent with the existence of employer sex discrimination at the point of job entry, but not afterward.

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Paper provided by Econometric Society in its series Econometric Society 2004 Australasian Meetings with number 303.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:ausm04:303

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Related research
Keywords: Sex Discrimination; Wage; Productivity; Panel Data;

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Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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  1. Hellerstein, J-K & Neumark, D, 1995. "Sex, Wages, and Productivity : an Empirical Analysis of Israeli, Firm-Level Data," Papers 9501, Michigan State - Econometrics and Economic Theory.
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  2. G. Steven Olley & Ariel Pakes, 1992. "The Dynamics of Productivity in the Telecommunications Equipment Industry," NBER Working Papers 3977, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-54, July. [Downloadable!] (restricted)
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  5. Posner, Richard A., 1999. "Employment discrimination: age discrimination and sexual harassment," International Review of Law and Economics, Elsevier, vol. 19(4), pages 421-446, December. [Downloadable!] (restricted)
  6. Judith K. Hellerstein & David Neumark, 2004. "Production Function and Wage Equation Estimation with Heterogeneous Labor: Evidence from a New Matched Employer-Employee Data Set," NBER Working Papers 10325, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Kawaguchi, Daiji, 2007. "A market test for sex discrimination: Evidence from Japanese firm-level panel data," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 441-460, June. [Downloadable!] (restricted)
  8. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November. [Downloadable!] (restricted)
  9. repec:rus:hseeco:9982 is not listed on IDEAS
  10. Ackerberg, Daniel & Lanier Benkard, C. & Berry, Steven & Pakes, Ariel, 2007. "Econometric Tools for Analyzing Market Outcomes," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 63 Elsevier. [Downloadable!] (restricted)
  11. Judith K. Hellerstein & David Neumark & Kenneth R. Troske, 1998. "Market Forces and Sex Discrimination," Labor and Demography 9807002, EconWPA. [Downloadable!]
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  12. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Houseman, Susan N & Abraham, Katharine G, 1993. "Female Workers as a Buffer in the Japanese Economy," American Economic Review, American Economic Association, vol. 83(2), pages 45-51, May. [Downloadable!] (restricted)
  14. Bowlus, Audra J, 1997. "A Search Interpretation of Male-Female Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 625-57, October. [Downloadable!] (restricted)
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  15. Pekka Ilmakunnas & Mika Maliranta & Jari Vainiomaki, 2000. "The Roles of Employer and Employee Characteristics for Plant Productivity," Econometric Society World Congress 2000 Contributed Papers 1349, Econometric Society. [Downloadable!]
  16. Andrea Ichino & Enrico Moretti, 2006. "Biological Gender Differences, Absenteeism and the Earning Gap," IZA Discussion Papers 2207, Institute for the Study of Labor (IZA). [Downloadable!]
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  17. Altonji, Joseph G. & Blank, Rebecca M., 1999. "Race and gender in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 48, pages 3143-3259 Elsevier. [Downloadable!] (restricted)
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