Distributional and Behavioral Effects of the Gender Wage Gap

46 Pages Posted: 16 Apr 2015

See all articles by Patricia Gallego-Granados

Patricia Gallego-Granados

German Institute for Economic Research (DIW Berlin)

Johannes Geyer

German Institute for Economic Research (DIW Berlin)

Date Written: April 2015

Abstract

The gender wage gap is a persistent labor market phenomenon. Most research focuses on the determinants of these wage differences. We contribute to this literature by exploring a different research question: if wages of women are systematically lower than male wages, what are the distributional consequences (disposable income) and what are the labor market effects (labor supply) of the wage gap? We demonstrate how the gender gap in gross hourly wages shows up in the distribution of disposable income of households. This requires taking into account the distribution of working hours as well as the tax-benefit system and other sources of household income. We present a methodological framework for deriving the gender wage gap in terms of disposable income which combines quantile decomposition, simulation techniques and structural labor supply estimation. This allows us to examine the implications of the gender wage gap for income inequality and working incentives. We illustrate our approach with an application to German data.

Keywords: gender wage gap, quantile regression, wage decomposition, labor supply, microsimulation, income distribution, tax-benefit system

JEL Classification: D31, J31, J16, H23

Suggested Citation

Gallego-Granados, Patricia and Geyer, Johannes, Distributional and Behavioral Effects of the Gender Wage Gap (April 2015). DIW Berlin Discussion Paper No. 1469, Available at SSRN: https://ssrn.com/abstract=2594619 or http://dx.doi.org/10.2139/ssrn.2594619

Patricia Gallego-Granados (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

Johannes Geyer

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

HOME PAGE: http://www.diw.de/programme/jsp/MA.jsp?uid=jgeyer&language=en

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