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Does Comparable Worth Work in a Decentralized Labor Market?

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  • Michael Baker
  • Nicole Fortin

Abstract

We investigate the effect of pro-active comparable worth legislation covering both the public and private sectors on wages, the gender wage gap and the gender composition of employment. The focus is the pay equity initiative of the Canadian province of Ontario in the early 1990s. We document substantial lapses in compliance and problems with the implementation of the law among smaller firms where the majority of men and women work. This evidence provides important lessons of the obstacles to extending pay equity to the private sector of a decentralized labor market. When we focus on those sectors of the labor market where compliance was relatively strict, our results suggest that any positive effects on the wages of women in female jobs were very modest. Our most consistently estimated effects of the law on wages are negative: slower wage growth for women in male jobs and for men in female jobs.
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Suggested Citation

  • Michael Baker & Nicole Fortin, 2000. "Does Comparable Worth Work in a Decentralized Labor Market?," CIRANO Working Papers 2000s-49, CIRANO.
    • Handle: RePEc:cir:cirwor:2000s-49
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    File URL: https://cirano.qc.ca/files/publications/2000s-49.pdf
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    References listed on IDEAS

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    1. Judith A. McDonald & Robert J. Thornton, 1998. "Private-Sector Experience with Pay Equity in Ontario," Canadian Public Policy, University of Toronto Press, vol. 24(2), pages 185-208, June.
    2. 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.
    3. Jeff Borland, 1999. "The Equal Pay Case–Thirty Years On," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(3), pages 265-272, September.
    4. Orazem, Peter F & Mattila, J Peter, 1990. "The Implementation Process of Comparable Worth: Winners and Losers," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 134-152, February.
    5. Perry C. Beider & B. Douglas Bernheim & Victor R. Fuchs & John B. Shoven, 1986. "Comparable Worth in a General Equilibrium Model of the U.S. Economy," NBER Working Papers 2090, National Bureau of Economic Research, Inc.
    6. Ehrenberg, Ronald G & Smith, Robert S, 1987. "Comparable-Worth Wage Adjustments and Female Employment in the State and Local Sector," Journal of Labor Economics, University of Chicago Press, vol. 5(1), pages 43-62, January.
    7. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 715-753.
    8. Nicole M. Fortin & Michael Baker, 1999. "Women's Wages in Women's Work: A U.S./Canada Comparison of the Roles of Unions and "Public Goods" Sector Jobs," American Economic Review, American Economic Association, vol. 89(2), pages 198-203, May.
    9. Macpherson, David A & Hirsch, Barry T, 1995. "Wages and Gender Composition: Why Do Women's Jobs Pay Less?," Journal of Labor Economics, University of Chicago Press, vol. 13(3), pages 426-471, July.
    10. Ashenfelter, Orley & Smith, Robert S, 1979. "Compliance with the Minimum Wage Law," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 333-350, April.
    11. Mark R. Killingsworth, 1987. "Heterogeneous Preferences, Compensating Wage Differentials, and Comparable Worth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(4), pages 727-742.
    12. Johnson, George & Solon, Gary, 1986. "Estimates of the Direct Effects of Comparable Worth Policy," American Economic Review, American Economic Association, vol. 76(5), pages 1117-1125, December.
    13. O'Neill, June & Brien, Michael & Cunningham, James, 1989. "Effects of Comparable Worth Policy: Evidence from Washington State," American Economic Review, American Economic Association, vol. 79(2), pages 305-309, May.
    14. Bergmann, Barbara R, 1989. "Does the Market for Women's Labor Need Fixing?," Journal of Economic Perspectives, American Economic Association, vol. 3(1), pages 43-60, Winter.
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    Cited by:

    1. Michael Baker & Nicole Fortin, 2004. "Comparable worth in a decentralized labour market: the case of Ontario," Canadian Journal of Economics, Canadian Economics Association, vol. 37(4), pages 850-878, November.
    2. Rubery, Jill., 2003. "Pay equity, minimum wage and equality at work," ILO Working Papers 993668723402676, International Labour Organization.
    3. repec:ilo:ilowps:366872 is not listed on IDEAS
    4. Nicole M. Fortin & Michael Huberman, 2002. "Occupational Gender Segregation and Women's Wages in Canada: An Historical Perspective," Canadian Public Policy, University of Toronto Press, vol. 28(s1), pages 11-39, May.

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    More about this item

    Keywords

    Pay equity; comparable worth; pro-active pay equity plans; Ontario; enforcement and compliance; Équité salariale; salaire égal pour travail de valeur comparable; programmes d'équité pro-actifs; Ontario; mise en vigueur et respect des lois;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)

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