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The Effects of Rent-Sharing on the Gender Wage Gap in the Israeli Manufacturing Sector

  • Navon, Guy

    ()

    (Bank of Israel)

  • Tojerow, Ilan

    ()

    (Free University of Brussels)

This paper analyzes the impact of workplace characteristics on individual wages based on a unique cross-section matched employer-employee dataset for the Israeli private manufacturing sector in 1995; especially, we examine the effects of the interaction between rent-sharing and wages on the gender wage gap. The empirical findings show that individual compensation is significantly and positively related to firms' profits-per-employee even when controlling for group effects in the residuals, individual and firms' characteristics, industry wage differentials and endogeneity of profits. Wage-profit elasticity is found to be 14 percent and it is insignificantly different between genders. With respect to the overall gender wage gap (on average women earn 28 percent less than men), the results show that within firms there is no gender discrimination and that 12 percent of this gap can be explained by the wage-profits profile and by the fact that women are more likely to be employed in less profitable firms than men.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2361.

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Length: 27 pages
Date of creation: Oct 2006
Date of revision:
Publication status: published in: Labour, 2013, 27 (3), 331-349
Handle: RePEc:iza:izadps:dp2361
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  1. Sap, Jolande, 1993. "Bargaining power and wages : A game-theoretic model of gender differences in union wage bargaining," Labour Economics, Elsevier, vol. 1(1), pages 25-48, June.
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  6. repec:fth:inseep:2001-16 is not listed on IDEAS
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  13. Erica L. Groshen, 1987. "The structure of the female/male wage differential: is it who you are, what you do, or where you work?," Working Paper 8708, Federal Reserve Bank of Cleveland.
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  16. 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.
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  21. Nekby, Lena, 2002. "Gender Differences in Rent Sharing and its Implications for the Gender Wage Gap," Working Paper Series 182, Trade Union Institute for Economic Research.
  22. 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 426-71, July.
  23. Margolis, D.N. & Salvanes, K.G., 2001. "Do Firms Really Share Rents with Their Workers?," Papers 11/2001, Norwegian School of Economics and Business Administration-.
  24. John M. Abowd & Thomas Lemieux, 1991. "The Effects of Product Market Competition on Collective Bargaining Agreements: The Case of Foreign Competition in Canada," NBER Working Papers 3808, National Bureau of Economic Research, Inc.
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  27. Neuman, Shoshana & Silber, Jacques G, 1996. "Wage Discrimination across Ethnic Groups: Evidence from Israel," Economic Inquiry, Western Economic Association International, vol. 34(4), pages 648-61, October.
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