Firms and the Gender Wage Gap: A Comparison of Eleven Countries

We quantify the role of gender-specific firm wage premiums in explaining the private-sector gender gap in hourly wages using a harmonized research design across 11 matched employer-employee datasets — ten European countries and Washington State, USA. These premiums contribute to the gender wage gap through two channels: women’s concentration in lower-paying firms (sorting) and women receiving lower premiums than men within the same firm (pay-setting). We find that firm wage premiums account for 10 to 30 percent of the gender wage gap. While both mechanisms matter, sorting is the predominant driver of the firm contribution to the gender wage gap in most countries. We document three patterns that are broadly consistent across countries: (1) women’s sorting into lower-paying firms increases with age; (2) women are more concentrated in low-paying firms with a high share of part-time workers; and (3) women receive about 90 percent of the rents that men receive from firm surplus gains.