Working Paper: CEPR ID: DP16671
Authors: Marco Guido Palladino; Alexandra Roulet; Mark Stabile
Abstract: Evidence across many jurisdictions suggests that firm pay premiums contribute meaningfully to the gender wage gap and that this is largely driven by sorting of women into lower paying firms rather than within firm gender differences in pay premiums. We build on this evidence using a cluster-based approach which allows us to relax the usual sample restrictions, to use repeated 2 year panels to examine how the contribution of firms to the gender wage gap has changed over time, to compute age-specific estimates of the gender gap in firm pay premium to document changes over the life cycle, and to explore whether there are complementarities between worker types and firm effects and how these differ by gender. We show that lifting the dual connected set restriction reveals a slightly larger contribution of firms to the gender wage gap, and more strikingly a higher within firm component. Further, the gender gap in firm pay premiums remained fairly constant between 1995 and 2015 (as did the decomposition of this gap) but represents an increasing share of the overall gender wage gap over time. It increases with age, exclusively driven by an increase of the sorting of women into lower paying firms. Finally we find limited evidence of complementarities for both men and women.
Keywords: gender wage gap; firm pay premium; sorting; bargaining; discrimination
JEL Codes: J16; J31; J71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm pay premiums (G22) | gender wage gap (J31) |
| sorting of women into lower-paying firms (J79) | gender wage gap (J31) |
| lifting the dual connected set restriction (Y80) | higher estimates of the gender gap in firm pay premiums (J31) |
| age (J14) | gender gap in firm pay premiums (J31) |
| worker types and firm effects (J29) | wage outcomes (J31) |
| gender gap in firm pay premiums remains stable (J31) | sorting behaviors over the life cycle (D15) |