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The Gender Pay Gap: Micro Sources and Macro Consequences

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  • Morchio, Iacopo
  • Moser, Christian

Abstract

We assess the sources and consequences of the gender pay gap using a combination of theory and measurement. We start by documenting three empirical facts. First, women are more likely than men to work at low-paying employers. Second, for women as for men, pay is not the sole determinant of workers' revealed-preference rankings of employers. Third, both pay and the revealed-preference rank differ between women and men within the same employer. To interpret these facts, we develop an empirical equilibrium search model featuring endogenous gender differences in pay, amenities, and recruiting intensities across employers. The estimated model suggests that compensating differentials explain one fifth of the gender gap, that there are significant output and welfare gains from eliminating gender differences, and that an equal-pay policy fails to close the gender pay gap.

Suggested Citation

  • Morchio, Iacopo & Moser, Christian, 2018. "The Gender Pay Gap: Micro Sources and Macro Consequences," MPRA Paper 99276, University Library of Munich, Germany, revised 24 Mar 2020.
  • Handle: RePEc:pra:mprapa:99276
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    Keywords

    Worker and Firm Heterogeneity; Misallocation; Compensating Differentials; Discrimination; Empirical Equilibrium Search Model; Linked Employer-Employee Data;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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