IDEAS home Printed from https://ideas.repec.org/p/cam/camdae/1966.html
   My bibliography  Save this paper

What Firms Do: Gender Inequality in Linked Employer-Employee Data

Author

Listed:
  • Casarico, A.
  • Lattanzio, S.

Abstract

This paper investigates the contribution of firms to the gender gap in earnings on average, at different quantiles of the earnings distribution, and over time to shed light on the role of firm pay policies in hindering or reinforcing the gender wage gap and to identify how their impact comes about. Using a linked employer-employee dataset for Italy, we show that the gap in firm pay policies explains on average 30% of the gender pay gap in the period 1995-2015. Sorting of women in low pay firms explains a larger fraction of the gender pay gap than differences in bargaining, on average and at the bottom of the distribution, whereas the latter dominates at the top. Moreover, differences in bargaining have increased in importance over the two decades. To explain sorting, we investigate whether women have a lower probability of moving towards firms with higher pay rates, and find that this is indeed the case. This differential mobility penalises, in particular, highly skilled women and can be related to the variability in wages in destination firms, with women not moving to those with high (unexplained) variance in pay. We also find some evidence that the firm environment as captured by exogenous changes in the gender balance in leadership positions influences the bargaining power of women, indicating that the latter is partly institution-driven.

Suggested Citation

  • Casarico, A. & Lattanzio, S., 2019. "What Firms Do: Gender Inequality in Linked Employer-Employee Data," Cambridge Working Papers in Economics 1966, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1966
    Note: sl828
    as

    Download full text from publisher

    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1966.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    2. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 967-1015.
    3. Wiji Arulampalam & Alison L. Booth & Mark L. Bryan, 2007. "Is There a Glass Ceiling over Europe? Exploring the Gender Pay Gap across the Wage Distribution," ILR Review, Cornell University, ILR School, vol. 60(2), pages 163-186, January.
    4. Kimberly Bayard & Judith Hellerstein & David Neumark & Kenneth Troske, 2003. "New Evidence on Sex Segregation and Sex Differences in Wages from Matched Employee-Employer Data," Journal of Labor Economics, University of Chicago Press, vol. 21(4), pages 887-922, October.
    5. Claudia Olivetti & Barbara Petrongolo, 2016. "The Evolution of Gender Gaps in Industrialized Countries," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 405-434, October.
    6. Sandra E. Black & Elizabeth Brainerd, 2004. "Importing Equality? The Impact of Globalization on Gender Discrimination," ILR Review, Cornell University, ILR School, vol. 57(4), pages 540-559, July.
    7. Christian Grund & Niels Westergaard-Nielsen, 2008. "Age structure of the workforce and firm performance," International Journal of Manpower, Emerald Group Publishing, vol. 29(5), pages 410-422, August.
    8. Alan Manning & Joanna Swaffield, 2008. "The gender gap in early-career wage growth," Economic Journal, Royal Economic Society, vol. 118(530), pages 983-1024, July.
    9. Martin Gonzalez-Rozada & Eduardo Levy Yeyati, 2018. "Do women ask for lower salaries? The supply side of the gender pay gap," Department of Economics Working Papers 2018_02, Universidad Torcuato Di Tella.
    10. Manning, Alan, 2011. "Imperfect Competition in the Labor Market," Handbook of Labor Economics, Elsevier.
    11. repec:kap:jecinq:v:16:y:2018:i:2:d:10.1007_s10888-018-9384-z is not listed on IDEAS
    12. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, Oxford University Press, vol. 133(2), pages 553-609.
    13. Marianne Bertrand & Sandra E Black & Sissel Jensen & Adriana Lleras-Muney, 2019. "Breaking the Glass Ceiling? The Effect of Board Quotas on Female Labour Market Outcomes in Norway," Review of Economic Studies, Oxford University Press, vol. 86(1), pages 191-239.
    14. Jewell, Sarah & Razzu, Giovanni & Singleton, Carl, 2018. "Who works for whom and the UK gender pay gap?," MPRA Paper 87191, University Library of Munich, Germany.
    15. Devicienti, Francesco & Maida, Agata & Pacelli, Lia, 2008. "The resurrection of the Italian wage curve," Economics Letters, Elsevier, vol. 98(3), pages 335-341, March.
    16. Nick Bloom & Fatih Guvenen & David J. Price & Jae Song, 2015. "Firming Up Inequality," CEP Discussion Papers dp1354, Centre for Economic Performance, LSE.
    17. Francine D. Blau & Lawrence M. Kahn, 2017. "The Gender Wage Gap: Extent, Trends, and Explanations," Journal of Economic Literature, American Economic Association, vol. 55(3), pages 789-865, September.
    18. Guvenen, Fatih & Kaplan, Greg & Song, Jae, 2014. "The Glass Ceiling and the Paper Floor: Gender Differences among Top Earners, 1981–2012," Working Papers 716, Federal Reserve Bank of Minneapolis.
    19. Argaw, Bethlehem A. & Maier, Michael F. & Skriabikova, Olga J., 2017. "Risk attitudes, job mobility and subsequent wage growth during the early career," ZEW Discussion Papers 17-023, ZEW - Leibniz Centre for European Economic Research.
    20. Azmat, Ghazala & Petrongolo, Barbara, 2014. "Gender and the labor market: What have we learned from field and lab experiments?," Labour Economics, Elsevier, vol. 30(C), pages 32-40.
    21. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    22. Francine D. Blau & Lawrence M. Kahn, 2003. "Understanding International Differences in the Gender Pay Gap," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 106-144, January.
    23. Ana Rute Cardoso & Rudolf Winter-Ebmer, 2010. "Female-Led Firms and Gender Wage Policies," ILR Review, Cornell University, ILR School, vol. 64(1), pages 143-163, October.
    24. James Albrecht & Anders Bjorklund & Susan Vroman, 2003. "Is There a Glass Ceiling in Sweden?," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 145-177, January.
    25. Ferrari, Giulia & Ferraro, Valeria & Profeta, Paola & Pronzato, Chiara D., 2018. "Do Board Gender Quotas Matter? Selection, Performance and Stock Market Effects," IZA Discussion Papers 11462, Institute of Labor Economics (IZA).
    26. Ana Rute Cardoso & Paulo Guimarães & Pedro Portugal, 2016. "What drives the gender wage gap? A look at the role of firm and job-title heterogeneity," Oxford Economic Papers, Oxford University Press, vol. 68(2), pages 506-524.
    27. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    28. Isaac Sorkin, 2018. "Ranking Firms Using Revealed Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 133(3), pages 1331-1393.
    29. Ivan A. Canay, 2011. "A simple approach to quantile regression for panel data," Econometrics Journal, Royal Economic Society, vol. 14(3), pages 368-386, October.
    30. 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.
    31. Bernardo Fanfani, 2018. "Tastes for Discrimination in Monopsonistic Labour Markets," Working papers 054, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    32. Del Bono, Emilia & Vuri, Daniela, 2011. "Job mobility and the gender wage gap in Italy," Labour Economics, Elsevier, vol. 18(1), pages 130-142, January.
    33. David Card & Ana Rute Cardoso & Patrick Kline, 2016. "Bargaining, Sorting, and the Gender Wage Gap: Quantifying the Impact of Firms on the Relative Pay of Women," The Quarterly Journal of Economics, Oxford University Press, vol. 131(2), pages 633-686.
    34. Francine D. Blau & Lawrence M. Kahn, 2000. "Gender Differences in Pay," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 75-99, Fall.
    35. Jorge Alvarez & Felipe Benguria & Niklas Engbom & Christian Moser, 2018. "Firms and the Decline in Earnings Inequality in Brazil," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(1), pages 149-189, January.
    36. Claudia Goldin, 2014. "A Grand Gender Convergence: Its Last Chapter," American Economic Review, American Economic Association, vol. 104(4), pages 1091-1119, April.
    37. Erling Barth & Alex Bryson & James C. Davis & Richard Freeman, 2016. "It's Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 67-97.
    38. repec:eee:inecon:v:111:y:2018:i:c:p:122-133 is not listed on IDEAS
    39. 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.
    40. Oliver Denk, 2015. "Financial sector pay and labour income inequality: Evidence from Europe," OECD Economics Department Working Papers 1225, OECD Publishing.
    41. Bowles, Hannah Riley & Babcock, Linda & McGinn, Kathleen L., 2005. "Constraints and Triggers: Situational Mechanics of Gender in Negotiation," Working Paper Series rwp05-051, Harvard University, John F. Kennedy School of Government.
    42. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    43. Anthony B. Atkinson & Alessandra Casarico & Sarah Voitchovsky, 2018. "Top incomes and the gender divide," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 225-256, June.
    44. Loprest, Pamela J, 1992. "Gender Differences in Wage Growth and Job Mobility," American Economic Review, American Economic Association, vol. 82(2), pages 526-532, May.
    45. Johannes Ludsteck, 2014. "The Impact of Segregation and Sorting on the Gender Wage Gap: Evidence from German Linked Longitudinal Employer-Employee Data," ILR Review, Cornell University, ILR School, vol. 67(2), pages 362-394, April.
    46. repec:aea:aejapp:v:11:y:2019:i:2:p:74-113 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Bargaining; Sorting; Linked Employer-Employee Data; Mobility gap; Gender quotas;

    JEL classification:

    • 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
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cam:camdae:1966. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jake Dyer). General contact details of provider: http://www.econ.cam.ac.uk/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.