Working Paper: CEPR ID: DP16383
Authors: Iacopo Morchio; Christian Moser
Abstract: Using linked employer-employee data from Brazil, we document a large gender pay gap due to women working at lower-paying employers with better nonpay attributes. To interpret these facts, we develop an equilibrium search model with endogenous firm pay, amenities, and hiring. We provide a constructive proof of identification of all model parameters. The estimated model suggests that amenities are important for both men and women, that compensating differentials explain half of the gender pay gap, and that there are significant output and welfare gains from eliminating gender differences. However, equal-treatment policies fail to achieve those gains.
Keywords: Earnings Inequality; Amenities; Equilibrium Search Model; Linked Employer-Employee Data; Worker and Firm Heterogeneity
JEL Codes: E24; J16; J31; J32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| women are sorted into lower-paying firms (J79) | gender pay gap (J31) |
| compensating differentials (J31) | gender pay gap (J31) |
| eliminating gender differences in employer preferences (J79) | gender pay gap (J31) |
| equal treatment policies (J78) | output gains (E23) |
| firm heterogeneity in amenities (R30) | gender pay gap (J31) |