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Assessment of labour market returns in the case of gender unique human capital

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  • Tiiu Paas
  • Maryna Tverdostup

Abstract

Maryna Tverdostup, Tiiu Paas, ERSA 2016: The paper focuses on the identification of the unique, non-reached by the opposite gender human capital and the analysis of its effect on the earning profiles of unique human capital holders. The overwhelming research aim is to better understand the possible reasons behind gender wage disparities, focusing on the unique features of male and female human capital and their returns. When assessing the gender pay disparities, variation of human capital characteristics across males and females is assumed to be one of the decisive factors of differences in the wage outcomes across gender groups. However, males and females may not only differ in the set of individual characteristics, but also the distributions of these variables can hardly overlap, inducing the issue which is commonly referred to as 'support problem?. Empirical part of the paper relies on the Survey of Adult Skills (PIAAC - Program for the International Assessment of Adult Competencies) data (OECD 2013), including the estimates of cognitive abilities in literacy, numeracy and problem solving in technology-rich environment. We develop our empirical study using PIAAC national database for Estonia as a small, rapidly developing European economy characterized by high rate of female labor force participation and gender wage disparities. The issue of gender wage disparities is especially topical in the case of small and developing economies where labour markets are particularly sensitive to any gaps in returns to labour. Therefore, we believe that Estonian case is relevant in a wage gap research framework allowing making certain generalizations that will be of particular policy value for other relatively quickly developing economies and regions, where women's labour participation rate is high and/or has a tendency to increase. In this paper, the unique, non-reached by the opposite gender human capital is identified and its effect on the earning profiles of unique human capital holders is analysed implementing several matching procedures and non-parametric decomposition. The results of the study show that the unique combination of skills, as a main component of the human capital, reached by males and females and unattained by opposite gender is one of the key sources of gender disparity in a human capital. The results revealed that male-unique human capital is at large extent embodied in combination of outstanding numerical and problem solving abilities, being often a strong competitive advantage of males. All in all, the novel perspective towards gender disparities in human capital and introducing a concept of gender-unique human capital within the wage gap framework, proved that men's and women's profiles cannot be directly compared, as particular characteristics are exclusive for certain gender. Ignoring this notion leads to overestimation of discriminatory labor market effects and thus imprecise wage inequality estimation.

Suggested Citation

  • Tiiu Paas & Maryna Tverdostup, 2016. "Assessment of labour market returns in the case of gender unique human capital," ERSA conference papers ersa16p157, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa16p157
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    References listed on IDEAS

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    More about this item

    Keywords

    human capital; gender wage gap; non-parametric decomposition; PIAAC; Estonia;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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