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Gender Earnings Gap in German Firms: The Impact of Firm Characteristics and Institutions

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  • Heinze, Anja
  • Wolf, Elke
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    Abstract

    Most existing analyses on the gender wage gap (GWG) have neglected the establishment as a place where inequality between male and female employees arises and is maintained. The use of linked employee-employer data permits us to move beyond the individual and consider the importance of the workplace to explain gender pay differentials. That is, we first provide a comprehensive study on the effects of various firm characteristics and the institutional framework on the GWG in Germany. The innovation of our research is that we do not just compare average male and female wages (of specific groups of employees), but look at within-firm gender wage differentials. Our results indicate that the mean GWG within firms is smaller than the average overall GWG. Furthermore, we can show that firms with formalized co-determination (works council) and those covered by collective wage agreements are more likely to have smaller GWG. It is also interesting to note that the wage differential between men and women decreases with firm size and increases with the wage level.

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    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 06-20.

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    Date of creation: 2006
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    Handle: RePEc:zbw:zewdip:4599
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    Keywords: gender wage gap; unions; works councils; discrimination; within-firms wage differentials;

    Find related papers by JEL classification:

    • 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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    1. David Margolis, 1995. "High Wage Workers and High Wage Firms," Post-Print halshs-00378229, HAL.
    2. Francine D. Blau & Lawrence Kahn, 1995. "The Gender Earnings Gap: Some International Evidence," NBER Chapters, in: Differences and Changes in Wage Structures, pages 105-144 National Bureau of Economic Research, Inc.
    3. Gubta, Nabanita Datta & Rothstein, Donna S., 2001. "The Impact of Worker and Establishment-level Characteristics on Male-Female Wage Differentials: Evidence from Danish Matched Employee-Employer Data," CLS Working Papers 01-9, University of Aarhus, Aarhus School of Business, Centre for Labour Market and Social Research.
    4. Olaf H¸bler & Uwe Jirjahn, 2003. "Works Councils and Collective Bargaining in Germany: The Impact on Productivity and Wages," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 471-491, 09.
    5. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, May.
    6. Meng, Xin, 2004. "Gender earnings gap: the role of firm specific effects," Labour Economics, Elsevier, vol. 11(5), pages 555-573, October.
    7. Kevin T. Reilly & Tony Wirjanto, 1997. "Does More Mean Less? The Male/Female Wage Gap and the Proportion of Females at the Establishment Level," Working Papers 98001, University of Waterloo, Department of Economics, revised Sep 1997.
    8. Bernd Fitzenberger & Gaby Wunderlich, 2002. "Gender Wage Differences in West Germany: A Cohort Analysis," German Economic Review, Verein für Socialpolitik, vol. 3(4), pages 379-414, November.
    9. Xin Meng & Dominique Meurs, 2004. "The gender earnings gap: effects of institutions and firms--a comparative study of French and Australian private firms," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 189-208, April.
    10. Marie Drolet, 2002. "Can the Workplace Explain Canadian Gender Pay Differentials?," Canadian Public Policy, University of Toronto Press, vol. 28(s1), pages 41-63, May.
    11. Richard B. Freeman, 1978. "Unionism and the Dispersion of Wages," NBER Working Papers 0248, National Bureau of Economic Research, Inc.
    12. Marie Drolet, 2002. "Can the workplace explain Canadian gender pay differentials?," New Zealand Economic Papers, Taylor & Francis Journals, vol. 36(1), pages 75-77.
    13. Gupta, Nabanita Datta, 1993. "Probabilities of Job Choice and Employer Selection and Male-Female Occupational Differences," American Economic Review, American Economic Association, vol. 83(2), pages 57-61, May.
    14. Datta Gupta, Nabanita & Tor, Eriksson, 2005. "New workplace practices and the gender wage gap," Working Papers 04-18, University of Aarhus, Aarhus School of Business, Department of Economics.
    15. Gartner, Hermann & Stephan, Gesine, 2004. "How collective contracts and works councils reduce the gender wage gap," IAB Discussion Paper 200407, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
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    Cited by:

    1. Joanna Tyrowicz & Lucas van der Velde & Irene van Staveren, 2015. "Differences in the Estimates of Gender Wage Gap Over The Life Cycle," Working Papers 2015-29, Faculty of Economic Sciences, University of Warsaw.
    2. Wolf, Elke & Heinze, Anja, 2007. "How to Limit Discrimination? Analyzing the Effects of Innovative Workplace Practices on Intra-Firm Gender Wage Gaps Using Linked Employer-Employee Data," ZEW Discussion Papers 07-077, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    3. Gizem Akar & Binnur Balkan & Semih Tümen, 2013. "Overview of Firm-Size and Gender Pay Gaps in Turkey: The Role of Informal Employment," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 2(3), pages 1-21, September.
    4. Alice Guyot & Stefan Berwing & Maria Lauxen-Ulbrich, 2009. "Income Differentials on Regional Labour Markets in Southwest Germany," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(3), pages 379-396, September.
    5. Antonczyk, Dirk & Fitzenberger, Bernd & Sommerfeld, Katrin, 2010. "Rising Wage Inequality, the Decline of Collective Bargaining, and the Gender Wage Gap," IZA Discussion Papers 4911, Institute for the Study of Labor (IZA).
    6. Dohmen, Thomas & Lehmann, Hartmut & Zaiceva, Anzelika, 2008. "The gender earnings gap inside a Russian firm : first evidence from personnel data - 1997 to 2002," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(2/3), pages 157-179.
    7. repec:rim:rimwps:11-08 is not listed on IDEAS
    8. repec:iab:iabzaf:v:41:i:2/3:p:157-179 is not listed on IDEAS
    9. Thomas Dohmen & Hartmut Lehmann & Anzelika Zaiceva, 2008. "The Gender Earnings Gap inside a Russian Firm: First Evidence from Personnel Data - 1997 to 2002 ; Updated Version," ESCIRRU Working Papers 6, DIW Berlin, German Institute for Economic Research.

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