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German Wage Underpayment: An Investigation into Labor Market Inefficiency and Discrimination

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  • Peter Dawson
  • Timothy Hinks
  • Duncan Watson

Abstract

Using stochastic panel wage frontiers, this paper estimates the relative underpayment of females and males in the reunified Germany. The estimates are initially applied to discrimination analysis. It finds that females have higher underpayment and that the male-female differential increased over the period 1991-1993. However, the paper suggests that the estimates of underpayment reflect other concerns, such as dynamic monopsony. Labor market inefficiency must be taken into account before discrimination analysis is possible.

Suggested Citation

  • Peter Dawson & Timothy Hinks & Duncan Watson, 2001. "German Wage Underpayment: An Investigation into Labor Market Inefficiency and Discrimination," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 107-114.
    • Handle: RePEc:diw:diwvjh:70-10-16
    DOI: 10.3790/vjh.70.1.107
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    References listed on IDEAS

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    1. Mick Brookes & Timothy Hinks & Duncan Watson, 2001. "Comparisons in Gender Wage Differentials and Discrimination between Germany and the United Kingdom," LABOUR, CEIS, vol. 15(3), pages 393-414, September.
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    Cited by:

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    2. Samuel Muehlemann & Paul Ryan & Stefan C. Wolter, 2013. "Monopsony Power, Pay Structure, and Training," ILR Review, Cornell University, ILR School, vol. 66(5), pages 1097-1114, October.
    3. Ma Ángeles Díaz & Rosario Sánchez, 2011. "Gender and potential wage in Europe: a stochastic frontier approach," International Journal of Manpower, Emerald Group Publishing Limited, vol. 32(4), pages 410-425, July.
    4. Khalid Maman Waziri, 2017. "Generalized Glass Ceilings in the United States – A Stochastic Metafrontier Approach," Working Papers halshs-01569834, HAL.
    5. Rosario Sanchez & Mª Angeles Díaz Mayans, 2006. "Wage Gap and Temporality in Spain," EcoMod2006 272100077, EcoMod.
    6. M. Ángeles Díaz & Rosario Sánchez, 2013. "Young Workers, Marital Status And Wage Gap," Revista de Economia Aplicada, Universidad de Zaragoza, Departamento de Estructura Economica y Economia Publica, vol. 21(1), pages 57-70, Spring.
    7. Joanna María Bashford-Fernández & Ana Rodríguez-Álvarez, 2019. "Wage Frontiers in Pre and Post-crisis Spain: Implications for Welfare and Inequality," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 143(2), pages 579-608, June.
    8. Dulce Contreras & Rosario Sánchez & Delfina Soria, 2016. "Geographical Mobility and Wage Efficiency for Women and Men for Four European Countries," Hacienda Pública Española / Review of Public Economics, IEF, vol. 216(1), pages 61-80, March.

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