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The gender wage gap – due to differences in efficiency wage effects or discrimination?

  • Schwieren,Christiane

    (METEOR)

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    Women often receive lower wages than men for comparable work. Many explanations are offered for this fact, ranging from women’s lower negotiation skills to discrimination by employers. In this paper, an experiment, which was originally conceptualized to test efficiency-wage theory, has been applied to test whether women get paid less than men in an experimental market, and if this is the case, why. The experiment is a variant of Fehr & Falk’s (1999) double auction with effort. Results are striking: Female workers receive significantly lower wages than male workers, no matter whether men or women are in the role of the firm. However, this does not pay for the firms, as women’s reactions to low wages are equal to those of men: low effort. More specifically, a high discrepancy between the wage asked by a worker and the wage offered by the firm leads to low effort. Extrapolating from the experiment to the “real” labor market, the results are pointing towards a vicious cycle: Women are offered lower wages than they expect, and consequentially they exhibit low effort levels. Therefore, employers who do not realize that women – just like men – reciprocate might regard their productivity as lower.

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    File URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:fc645cfa-8cc4-4581-97be-82183a66479b/datastreams/ASSET1/content
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    Paper provided by Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) in its series Research Memorandum with number 046.

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    Date of creation: 2003
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    Handle: RePEc:unm:umamet:2003046
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    1. Ernst Fehr & Armin Falk, 2003. "Wage Rigidity in a Competitive Incomplete Contract Market," Labor and Demography 0305001, EconWPA.
    2. Haagsma, Rein, 1993. "Is statistical discrimination socially efficient?," Information Economics and Policy, Elsevier, vol. 5(1), pages 31-50, January.
    3. Walters, Amy E. & Stuhlmacher, Alice F. & Meyer, Lia L., 1998. "Gender and Negotiator Competitiveness: A Meta-analysis," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(1), pages 1-29, October.
    4. Light, Audrey & Ureta, Manuelita, 1992. "Panel Estimates of Male and Female Job Turnover Behavior: Can Female Nonquitters Be Identified?," Journal of Labor Economics, University of Chicago Press, vol. 10(2), pages 156-81, April.
    5. Francine D. Blau & Larry M. Kahn, 1981. "Race and sex differences in quits by young workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 34(4), pages 563-577, July.
    6. Francine D. Blau, 1990. "Career Plans and Expectations of Young Women and Men: The Earnings Gap and Labor Force Participation," NBER Working Papers 3445, National Bureau of Economic Research, Inc.
    7. Francine D. Blau & Lawrence M. Kahn, 2000. "Gender Differences in Pay," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 75-99, Fall.
    8. Deborah Anderson & David Shapiro, 1996. "Racial differences in access to high-paying jobs and the wage gap between black and white women," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 49(2), pages 273-286, January.
    9. Christoph Meng, 2002. "(Fe)male jobs and (fe)male wages: disentangling the effect of personal and job characteristics on wages by measuring stereotypes," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 45(2), pages 143-167.
    10. Viscusi, W Kip, 1980. "Sex Differences in Worker Quitting," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 388-98, August.
    11. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Working Papers 1906, National Bureau of Economic Research, Inc.
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