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Explaining Gender Wage Differentials: Findings from a Random Effects Model

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  • Kyyrä, Tomi
  • Korkeamäki, Ossi

Abstract

In this paper we evaluate the extent to which the gender wage gap in the Finnish manufacturing sector is attributable to within-job wage differentials, sex differences in individual qualifications, and disproportionate concentration of women in lower-paying firms and lower-paying jobs within firms. We use matched employer-employee data to compare wage differentials between similarly qualified female and male workers who are doing the same job for the same employer. Our modelling approach employs a nested random effects specification to account for the hierarchical grouped structure of the underlying data. White-collar women are found to earn 22% less on average than their male counterparts do. Among blue-collar workers, women?s mean wage is 16% lower than men?s mean wage. The major part of the gender wage gap of white-collar workers results from sex segregation among jobs within firms. By contrast, most of the gap of blue-collar workers is attributable to sex segregation among firms. Unexplained within-job wage differentials account for a quarter of the overall gap of white-collar workers and one-fifth of the overall gap of blue-collar workers.

Suggested Citation

  • Kyyrä, Tomi & Korkeamäki, Ossi, 2003. "Explaining Gender Wage Differentials: Findings from a Random Effects Model," Discussion Papers 320, VATT Institute for Economic Research.
    • Handle: RePEc:fer:dpaper:320
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    File URL: https://www.doria.fi/handle/10024/148299
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    References listed on IDEAS

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    6. Erica L. Groshen, 1991. "The Structure of the Female/Male Wage Differential: Is It Who You Are, What You Do, or Where You Work?," Journal of Human Resources, University of Wisconsin Press, vol. 26(3), pages 457-472.
    7. H. Baltagi, Badi & Heun Song, Seuck & Cheol Jung, Byoung, 2001. "The unbalanced nested error component regression model," Journal of Econometrics, Elsevier, vol. 101(2), pages 357-381, April.
    8. Colm Harmon & Ian Walker & Niels Westergaard-Nielsen (ed.), 2001. "Education and Earnings in Europe," Books, Edward Elgar Publishing, number 2237.
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    Cited by:

    1. Korkeamaki, Ossi & Kyyra, Tomi, 2006. "A gender wage gap decomposition for matched employer-employee data," Labour Economics, Elsevier, vol. 13(5), pages 611-638, October.
    2. Juan Antonio Campos-Soria & Miguel Angel Ropero-García, 2016. "Gender segregation and earnings differences in the Spanish labour market," Applied Economics, Taylor & Francis Journals, vol. 48(43), pages 4143-4155, September.

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