Gender Pay Differences in the European Union: Do Higher Wages Make Up for Discrimination?

26 Pages Posted: 28 Jul 2009

See all articles by Eric Canton

Eric Canton

European Union - European Commission

I. Verheul

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management (ERIM)

Date Written: January 2009 7,

Abstract

This paper explores the role of social interactions at the work floor for understanding gender pay differences in the EU. Using data from the Fourth European Working Conditions Survey, we find that sex similarity of subordinate and supervisor decreases the pay disadvantage for women in non-managerial occupations, though working for a female boss is associated with a lower wage than working for a man. This may point at a ‘discrimination-for-pay’ effect. Female workers can avoid part of the discrimination against them by working for a woman and accepting lower pay. And when they face stronger discrimination in the situation of a male supervisor, they are ‘bribed’ by being offered a higher salary. Different results are obtained for managerial workers where sex similarity of worker and superior actually puts women at a further disadvantage. In addition to effects of vertical gender segregation, we examine whether wage formation is influenced by the proportion of women per sector (i.e., horizontal segregation), but find only weak support for the so-called social bias theory. Our main message is that while the traditional human capital model tends to study the wage formation process in isolation, gender pay differentials can also be seen as a social phenomenon, stemming from social interactions in labor markets.

Keywords: gender pay differences, wages, European Union, emancipation

JEL Classification: M13, O32, M, E24, M12

Suggested Citation

Canton, Eric and Verheul, Ingrid, Gender Pay Differences in the European Union: Do Higher Wages Make Up for Discrimination? (January 2009 7,). ERIM Report Series Reference No. ERS-2009-041-ORG. Available at SSRN: https://ssrn.com/abstract=1437866

Eric Canton

European Union - European Commission ( email )

Rue de la Loi 200
Brussels, B-1049
Belgium

Ingrid Verheul (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

Burgemeester Oudlaan 50
3062 PA Rotterdam, NL 3062 PA
Netherlands
+31 10 4081398 (Phone)
+31 10 4089146 (Fax)

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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