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Gender wage gap in West Germany: how far do gender differences in human capital matter?

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  • Lauer, Charlotte

Abstract

This paper analyses the extent to which gender differences in human capital contribute to explaining the observable wage differential in favour of men and its reduction since the mid-eighties among West German full-time employees in the private sector. Based on a simple analytical framework, the analysis shows that if a large part of the gender wage gap can be attributed to women?s relative deficit with respect to human capital endowment, an equally large part stems from the fact that female human capital is less valued in terms of wages. The gender wage gap narrowing stems mainly from a reduction in gender inequality with respect to the returns to human capital in terms of wage which favours women. Nevertheless, women improved their relative position regarding human capital endowment, but the overall lower valuation of human capital by the labour market reduces the benefit of this relative improvement. The roles of the educational attainment, labour market experience and occupational factors were analysed specifically. The level of educational attainment explains a large part of the gender wage gap, mainly because women have a lower educational attainment than men but also because similar qualification levels yield lower returns for women. Taken alone, the developments related to education would have increased the gender wage gap significantly. This is because, if women did catch up in terms of educational attainment, the effect of this educational expansion was more than compensated by the fact that the returns to education dropped particularly markedly for women. Changes related to labour market experience have a neutral influence on the gender wage gap. Women improved their relative position concerning their work experience, but lose their advantage in the returns to work experience. Part of the gender wage gap is attributable to occupational segregation, i.e. female crowding into lower paid occupations. The extent of occupational segregation has remained fairly stable, but the wage penalty for working in typically female jobs has increased over time.

Suggested Citation

  • Lauer, Charlotte, 2000. "Gender wage gap in West Germany: how far do gender differences in human capital matter?," ZEW Discussion Papers 00-07, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:5283
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    Cited by:

    1. Ammermüller, Andreas, 2005. "Poor Background or Low Returns? Why Immigrant Students in Germany Perform so Poorly in PISA," ZEW Discussion Papers 05-18, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Joanna Tyrowicz & Lucas van der Velde & Irene van Staveren, 2018. "Identifying Age Penalty in Women's Wages: New Method and Evidence from Germany 1984-2014," IAAEU Discussion Papers 201803, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    3. Ammermüller, Andreas, 2004. "PISA: What Makes the Difference? Explaining the Gap in PISA Test Scores Between Finland and Germany," ZEW Discussion Papers 04-04, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. repec:iab:iabmit:v:36:i:4:p:560-572 is not listed on IDEAS
    5. Antonczyk, Dirk & Fitzenberger, Bernd & Sommerfeld, Katrin, 2010. "Rising wage inequality, the decline of collective bargaining, and the gender wage gap," Labour Economics, Elsevier, vol. 17(5), pages 835-847, October.
    6. Joanna Tyrowicz & Lucas van der Velde & Irene van Staveren, 2017. "Identifying Age Penalty in Women's Wages: New Method and Evidence from Germany 1984-2014," SOEPpapers on Multidisciplinary Panel Data Research 956, DIW Berlin, The German Socio-Economic Panel (SOEP).
    7. 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.
    8. Menshawy Badr & Oliver Morrissey & Simon Appleton, "undated". "Gender differentials in maths test scores in Mena countries," Discussion Papers 12/04, University of Nottingham, CREDIT.
    9. Usamah Fayez Al-Farhan, 2010. "Changes in the Gender Wage Gap in Germany during a Period of Rising Wage Inequality 1999-2006: Was it Discrimination in the Returns to Human Capital?," SOEPpapers on Multidisciplinary Panel Data Research 293, DIW Berlin, The German Socio-Economic Panel (SOEP).
    10. Lauk, Martina & Meyer, Susanne, 2004. "Frauen, Männer und die Hausarbeit Hintergründe der Zeitverwendung in Theorie und Empirie," Darmstadt Discussion Papers in Economics 125, Darmstadt University of Technology, Department of Law and Economics.
    11. Lauk, Martina & Meyer, Susanne, 2005. "Women, Men and Housework Time Allocation: Theory and Empirical Results," Darmstadt Discussion Papers in Economics 143, Darmstadt University of Technology, Department of Law and Economics.
    12. Andreas Ammermueller, 2007. "PISA: What makes the difference?," Empirical Economics, Springer, vol. 33(2), pages 263-287, September.
    13. Beblo, Miriam & Wolf, Elke, 2003. "Sind es die Erwerbsunterbrechungen? : ein Erklärungsbeitrag zum Lohnunterschied zwischen Frauen und Männern in Deutschland (Is it the employment interruptions? * a contribution to explaining the wage ," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 36(4), pages 560-572.
    14. 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.

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