Competition and the Gender Wage Gap: New Evidence from Linked Employer-Employee Data in Hungary 1986-2003

Anna Lovasz

No 804, Budapest Working Papers on the Labour Market from Institute of Economics, Centre for Economic and Regional Studies

Abstract: The overall gender wage gap fell from .31 to .15 between 1986 and 2003 following the transition to a free market in Hungary. During the same time period, firms faced increased competition from both new domestic and foreign firms due to the rapid liberalization measures implemented by the government. Becker's (1957) model of employer taste discrimination implies that employers that discriminate against women may be forced out of the market by competition in the long run, leading to a fall in the gender wage gap. I test this implication using data from the Hungarian Wage and Earnings Survey covering 1986-2003. I estimate the effect of variation in various measures of product market competition, including trade variables, on the within-firm endowment-adjusted gender wage gap, making use of the fact that I am able to follow firms over time. The estimates show a significant negative relationship between product market competition and the within-firm gender wage gap.

Keywords: Transitional labor market; wage differentials; gender discrimination (search for similar items in EconPapers)
JEL-codes: J31 J71 P20 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2008-06
New Economics Papers: this item is included in nep-com, nep-lab and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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