Search Intensity and Wage Differences

Tairi Room

No 2004-1, Bank of Estonia Working Papers from Bank of Estonia

Abstract: Differences in job search behaviour have long been recognized in theoretical literature as a potential source of wage differentials. The aim of the current paper is to estimate whether there exists a systematic difference in search activity between genders and whether this can explain a part of the gender wage gap. These hypotheses are tested using micro-level data for the years 1998-2000 from the Estonian Labour Force Survey. The empirical model yields a result that unemployed men search more actively for new jobs than women. Controlling for the difference in search intensity significantly reduces the residual gender wage differential.

Date: 2004-10-10, Revised 2004-10-12
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