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What Is the Role of Firm-Specific Pay Policies on the Gender Earnings Gap in Canada?

Jiang Li (), Benoit Dostie () and Gaëlle Simard-Duplain
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Gaëlle Simard-Duplain: University of British Columbia

No 13907, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using data from the Canadian Employer-Employee Dynamics Database between 2001 and 2015, we examine the impact of firms' hiring and pay-setting policies on the gender earnings gap in Canada. Consistent with the existing literature and following Card, Cardoso, and Kline (2016), we find that firm-specific premiums explain nearly one quarter of the 26.8% average earnings gap between female and male workers. On average, firms' hiring practices – due to difference in the relative proportion of women hired at high-wage firms, or sorting – and pay-setting policies – due to differences in pay by gender within similar firms – each explain about one half of this firm effect. The compositional difference between the two channels varies substantially over the life-cycle, by parental and marital status, and across provinces.

Keywords: gender wage gap; firm effects; marital status; linked employer-employee data; pay-setting; sorting (search for similar items in EconPapers)
JEL-codes: J16 J31 J51 J71 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2020-11
New Economics Papers: this item is included in nep-bec, nep-gen, nep-hrm and nep-lab
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