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Gender wage gap in West Germany : how far do gender differences in human capital matter?

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Author Info
Lauer, Charlotte
Abstract

This paper analyses the extent to which gender differences in human capital contribute to explaining the observable wage differential in favour of men and its reduction since the mid-eighties among West German full-time employees in the private sector. Based on a simple analytical framework, the analysis shows that if a large part of the gender wage gap can be attributed to women?s relative deficit with respect to human capital endowment, an equally large part stems from the fact that female human capital is less valued in terms of wages. The gender wage gap narrowing stems mainly from a reduction in gender inequality with respect to the returns to human capital in terms of wage which favours women. Nevertheless, women improved their relative position regarding human capital endowment, but the overall lower valuation of human capital by the labour market reduces the benefit of this relative improvement. The roles of the educational attainment, labour market experience and occupational factors were analysed specifically. The level of educational attainment explains a large part of the gender wage gap, mainly because women have a lower educational attainment than men but also because similar qualification levels yield lower returns for women. Taken alone, the developments related to education would have increased the gender wage gap significantly. This is because, if women did catch up in terms of educational attainment, the effect of this educational expansion was more than compensated by the fact that the returns to education dropped particularly markedly for women. Changes related to labour market experience have a neutral influence on the gender wage gap. Women improved their relative position concerning their work experience, but lose their advantage in the returns to work experience. Part of the gender wage gap is attributable to occupational segregation, i.e. female crowding into lower paid occupations. The extent of occupational segregation has remained fairly stable, but the wage penalty for working in typically female jobs has increased over time.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 00-07.

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Date of creation: 2000
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Handle: RePEc:zbw:zewdip:5283

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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.:
  1. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  2. Franz, Wolfgang & Steiner, Viktor, 1999. "Wages in the East German transition process : facts and explanations," ZEW Discussion Papers 99-40, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  3. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-43, May. [Downloadable!] (restricted)
  4. Blau, Francine D & Kahn, Lawrence M, 1997. "Swimming Upstream: Trends in the Gender Wage Differential in 1980s," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 1-42, January. [Downloadable!] (restricted)
  5. Blau, Francine D & Kahn, Lawrence M, 1996. "Wage Structure and Gender Earnings Differentials: An International Comparison," Economica, London School of Economics and Political Science, vol. 63(250), pages S29-62, Suppl.. [Downloadable!] (restricted)
  6. Lauer, Charlotte & Steiner, Viktor, 2000. "Returns to education in West Germany : an empirical assessment," ZEW Discussion Papers 00-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  7. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier. [Downloadable!] (restricted)
  8. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March. [Downloadable!] (restricted)
  9. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January. [Downloadable!] (restricted)
  10. David Neumark, 1987. "Employers' discriminatory behavior and the estimation of wage discrimination," Special Studies Papers 227, Board of Governors of the Federal Reserve System (U.S.).
  11. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Blackwell Publishing, vol. 14(1), pages 53-68, February. [Downloadable!] (restricted)
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  1. Andreas Ammermueller, 2007. "PISA: What makes the difference?," Empirical Economics, Springer, vol. 33(2), pages 263-287, September. [Downloadable!] (restricted)
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  2. Ammermüller, Andreas, 2005. "Poor Background or Low Returns? : Why Immigrant Students in Germany Perform so Poorly in PISA," ZEW Discussion Papers 05-18, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  3. Martina Lauk & Susanne Meyer, 2005. "Women, Men and Housework Time Allocation: Theory and Empirical Results," Darmstadt Discussion Papers in Economics 143, Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology). [Downloadable!]
  4. Martina Lauk & Susanne Meyer, 2004. "Familiale Arbeitsteilung: Determinanten in Theorie und Empirie," Darmstadt Discussion Papers in Economics 125, Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology). [Downloadable!]
  5. Ammermüller, Andreas, 2004. "PISA: What Makes the Difference? : Explaining the Gap in PISA Test Scores Between Finland and Germany," ZEW Discussion Papers 04-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  6. Fitzenberger, Bernd & Wunderlich, Gaby, 2000. "Gender wage differences in West Germany : a cohort analysis," ZEW Discussion Papers 00-48, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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