Working Paper: CEPR ID: DP1805
Authors: Jennifer Hunt
Abstract: Since monetary union with West Germany on 1 July 1990, eastern female monthly wages have risen by 10 percentage points relative to male wages, but female employment has fallen 5 percentage points more than male employment. Using the German Socio-Economic Panel to study the years 1990?94, I show that along with age, the wage of a worker in 1990 is the most important determinant of the hazard rate from employment. Differences in mean 1990 wages explain more than one-half of the gender gap in this hazard rate, since low earners were more likely to leave employment, and were disproportionately female. The withdrawal from employment of low earners can explain 80% of the rise in relative female wages. There is no evidence that reduction in child care availability is a major factor in reducing female employment rates.
Keywords: employment; wages; gender; discrimination; transition
JEL Codes: J7; J23; J31; P5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| initial wages in 1990 (J31) | likelihood of leaving employment (J63) |
| lower wages (J31) | higher exit rates from employment (J63) |
| low-wage individuals (J31) | disproportionately female (J16) |
| differences in mean 1990 wages (J31) | male-female gap in exits from employment (J63) |
| withdrawal of low earners from workforce (J26) | observed increase in relative wages for women (J39) |
| wage levels (J31) | probability of job loss due to layoffs (J63) |
| presence of children aged 0-1 (J13) | risk of leaving employment for non-layoff reasons (J63) |