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Gender Wage Gap and Firm Market Power in Chile

Author

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  • Sanchez, Rafael
  • Finot, Javier
  • Villena, Mauricio G.

Abstract

The main aim of this work is to explain the Chilean gender wage gap using a dynamic monopsony model to estimate labor supply elasticities at the firm level. To the best of our knowledge, our study is the first to measure monopsony power at the firm level using voluntary separations and the first to apply this methodology to estimate such elasticities for a middle-income country. Our results suggest that elasticities of labor supply to firms are rather small, which implies that firms have market power. We also found that Chilean men earn approximately 19% more than women as a result of the difference in labor supply elasticities by gender, ceteris paribus. Furthermore, we found that the magnitude of between-firm di¤erences in elasticities are more than twice the magnitude of within-firm differences, suggesting that the gender wage gap is driven more by structural factors that generate gender sorting to firms. Finally, we found that elasticities for a high-income country (United States) are 63% and 100% higher than those obtained for a middle-income country for men and women, respectively, suggesting higher labor market frictions in middle-income countries for men and even higher for women.

Suggested Citation

  • Sanchez, Rafael & Finot, Javier & Villena, Mauricio G., 2019. "Gender Wage Gap and Firm Market Power in Chile," MPRA Paper 99149, University Library of Munich, Germany, revised 01 Sep 2019.
    • Handle: RePEc:pra:mprapa:99149
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    References listed on IDEAS

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    More about this item

    Keywords

    Gender Pay Gap; Dynamic Monopsony; Elasticity of Labor Supply; Worker Mobility; Chile;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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