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Firm-Specific Gender and Ethnicity Pay Differentials in Britain

  • Stephen Pudney
  • Nikolaos Theodoropoulos

Using matched employer-employee data we examine firm-specific gender and ethnicity pay differentials in Britain. We estimate an econometric earnings model using the partially-observed pay variable provided in the data and test the normality assumption that underlies the usual interval regression technique. We then estimate alternative specifications allowing for firm-specific random effects, using a semi-parametric finite mixture estimator. The empirical estimation reveals a 22% (13%) weekly (hourly) gender pay gap and a 28% (19%) weekly (hourly) pay race gap. Strikingly, although significant and sizeable the firm-specific effects are not correlated with other variables that may act as indirect indicators of pay differentials

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Paper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 9-2006.

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Length: 35 pages
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:ucy:cypeua:9-2006
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