The Gender Pay Gap: Micro Sources and Macro Consequences
105 Pages Posted: 23 May 2018 Last revised: 3 Aug 2020
Date Written: July 31, 2020
We document that a large share of the gender pay gap in Brazil is due to women working at lower-paying employers. At the same time, women's revealed-preference ranking of employers is less increasing in pay compared to that of men. To interpret these facts, we develop an empirical equilibrium search model with endogenous gender differences in pay, amenities, and recruiting intensities across employers. The estimated model suggests that compensating differentials explain one-fifth of the gender pay gap, that there are significant output and welfare gains from eliminating gender differences, and that equal-treatment policies fail to close the gender pay gap.
Keywords: Empirical Equilibrium Search Model, Linked Employer-Employee Data, Worker and Firm Heterogeneity, Misallocation, Compensating Differentials, Discrimination
JEL Classification: E24, E25, J16, J31
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