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Male-Female Wage and Productivity Differentials: A Structural Approach Using Japanese Firm-level Panel Data

  • ASANO Hirokatsu
  • KAWAGUCHI Daiji

In an attempt to explain the male-female wage differential, we estimated the relative marginal productivity and relative wage of female workers compared to those of male workers, using panel data from Japanese firms. The estimation results indicate that firms hiring 10 percentage points more women produce 0.8 percent more given the total wage bill and other inputs. Crosssectional estimates that neglect firm fixed effects indicate that female workers' marginal productivity is 45 percent of male workers', while female wage is 30 percent of male wage. These estimates indicate that part of the wage differential cannot be explained by the productivity differential. The estimation that allows for the correlated productivity/demand shocks suggests the robustness of the results. The IV estimator that allows for firm-level fixed effects seems to suffer from the bias due to the positive correlation between productivity/demand shocks and female employee proportion. Evidence found in this study rejects the null hypothesis that the male-female wage differential reflects the male-female productivity differentials.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 07020.

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Length: 30 pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:eti:dpaper:07020
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  1. Hellerstein, Judith K & Neumark, David, 1999. "Sex, Wages, and Productivity: An Empirical Analysis of Israeli Firm-Level Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 95-123, February.
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  18. repec:rus:hseeco:9982 is not listed on IDEAS
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