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Unequal Pay or Unequal Employment? A Cross-Country Analysis of Gender Gaps

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Author Info
Claudia Olivetti () (Boston University)
Barbara Petrongolo () (London School of Economics CEP, CEPR and IZA Bonn)

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Abstract

Gender wage and employment gaps are negatively correlated across countries. We argue that non-random selection of women into work explains an important part of such correlation and thus of the observed variation in wage gaps. The idea is that, if women who are employed tend to have relatively high-wage characteristics, low female employment rates may become consistent with low gender wage gaps simply because low-wage women would not feature in the observed wage distribution. We explore this idea across the US and EU by estimating gender gaps in potential wages. We recover information on wages for those not in work in a given year using alternative imputation techniques. Imputation is based on (i) wage observations from other waves in the sample, (ii) observable characteristics of the nonemployed and (iii) a statistical repeated-sampling model. We then estimate median wage gaps on the resulting imputed wage distributions, thus simply requiring assumptions on the position of the imputed wage observations with respect to the median, but not on their level. We obtain higher median wage gaps on imputed rather than actual wage distributions for most countries in the sample. However, this difference is small in the US, the UK and most central and northern EU countries, and becomes sizeable in Ireland, France and southern EU, all countries in which gender employment gaps are high. In particular, correction for employment selection explains more than a half of the observed correlation between wage and employment gaps.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1941.

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Length: 48 pages
Date of creation: Jan 2006
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Handle: RePEc:iza:izadps:dp1941

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Related research
Keywords: median gender gaps; sample selection; wage imputation;

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Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
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

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Black, Sandra E. & Spitz-Oener, Alexandra, 2007. "Explaining Women?s Success: Technological Change and the Skill Content of Women?s Work," ZEW Discussion Papers 07-033, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  2. Natalie Chen & Paola Conconi & Carlo Perroni, 2007. "Women's Earning Power and the "Double Burden" of Market and Household Work," SOEPpapers 20, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
    Other versions:
  3. Dragana Djurdjevic & Sergiy Radyakin, 2007. "Decomposition of the Gender Wage Gap Using Matching: An Application for Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 143(IV), pages 365-396, December. [Downloadable!]
    Other versions:
  4. Chen, Natalie & Conconi, Paola & Perroni, Carlo, 2007. "Does Migration Empower Married Women?," The Warwick Economics Research Paper Series (TWERPS) 812, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  5. Claudia Olivetti, . "Gender and the Labour Market: An International Perspective and the case of Italy," Boston University - Department of Economics - Working Papers Series wp2009-010, Boston University - Department of Economics. [Downloadable!]
  6. Luís Delfim Santos & José Varejão, 2006. "Employment, Pay and Discrimination in the Tourism Industry," FEP Working Papers 205, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
  7. Tomas Kögel, 2006. "An explanation of the positive correlation between fertility and female employment across Western European countries," Discussion Paper Series 2006_11, Department of Economics, Loughborough University. [Downloadable!]
  8. de la Rica, Sara & Dolado, Juan José & García-Peñalosa, Cecilia, 2008. "On Gender Gaps and Self-fulfilling Expectations: Theory, Policies and Some Empirical Evidence," IZA Discussion Papers 3553, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  9. Pedro Carneiro & Sokbae 'Simon' Lee, 2009. "Trends in quality-adjusted skill premia in the United States, 1960-2000," CeMMAP working papers CWP02/09, Centre for Microdata Methods and Practice, Institute for Fiscal Studies. [Downloadable!]
  10. Tindara ADDABBO & Donata Favaro, 2007. "Education and wage differentials by gender in Italy," CHILD Working Papers wp04_07, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY. [Downloadable!]
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