Explaining Gender Wage Differentials: Findings from a Random Effects Model

Tomi Kyyrä and Ossi Korkeamäki

No 320, Discussion Papers from VATT Institute for Economic Research

Abstract: In this paper we evaluate the extent to which the gender wage gap in the Finnish manufacturing sector is attributable to within-job wage differentials, sex differences in individual qualifications, and disproportionate concentration of women in lower-paying firms and lower-paying jobs within firms. We use matched employer-employee data to compare wage differentials between similarly qualified female and male workers who are doing the same job for the same employer. Our modelling approach employs a nested random effects specification to account for the hierarchical grouped structure of the underlying data. White-collar women are found to earn 22% less on average than their male counterparts do. Among blue-collar workers, women?s mean wage is 16% lower than men?s mean wage. The major part of the gender wage gap of white-collar workers results from sex segregation among jobs within firms. By contrast, most of the gap of blue-collar workers is attributable to sex segregation among firms. Unexplained within-job wage differentials account for a quarter of the overall gap of white-collar workers and one-fifth of the overall gap of blue-collar workers.

Keywords: Gender wage gap, wage discrimination, sex segregation, random effects model, Labour market, Työmarkkinat, Labor market and policies promoting economic growth, Työmarkkinat ja kasvua tukeva politiikka, C100 - Econometric and Statistical Methods: General, J160 - Economics of Gender; Non-labor Discrimination, J310 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. (industry, schooling, experience, tenure, cohort, etc.), J700 - Labor Discrimination: General, L000 - Industrial Organization: General, (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (2)

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