The Role of Firms in the Gender Wage Gap

32 Pages Posted: 8 Mar 2020 Last revised: 22 Apr 2021

See all articles by Jaan Masso

Jaan Masso

University of Tartu - Faculty of Economics and Business Administration

Jaanika Meriküll

University of Tartu - Faculty of Economics and Business Administration

Priit Vahter

University of Tartu - Faculty of Economics and Business Administration

Date Written: February 6, 2020

Abstract

Recent research suggests that firm-level factors play a significant role in the gender wage gap. This paper adds to this literature by analysing the role of sorting between firms and bargaining within firms using the methodology of Card et al. (2016). We employ linked employer-employee data for the whole population of firms and employees from Estonia for 2006–2017. Estonia is a country with the highest gender wage gap in the EU with about two-thirds of that unexplained by conventional factors. The results show that firm-level factors are important determinants of the gender wage gap, explaining as much as 35% of the gap. We find that within-firm bargaining plays a larger role in the gender wage gap than similar prior papers. This could be related to lenient labour market institutions, as reflected in low minimum wages and union power, and to lower bargaining skills of women. Further, the role of firm-level factors in the gender wage gap have increased over time, and these are especially important at the top of the wage distribution and among workers that are more skilled. There is a heavy penalty for motherhood in wages, 4–9 log points, but this is not related to firm-specific time-invariant productivity premiums.

Keywords: Gender wage gap, firm-level productivity premiums, sorting and bargaining, distribution of wages, skills, motherhood penalty

JEL Classification: J31, J71, J16, D22

Suggested Citation

Masso, Jaan and Meriküll, Jaanika and Vahter, Priit, The Role of Firms in the Gender Wage Gap (February 6, 2020). Available at SSRN: https://ssrn.com/abstract=3532955 or http://dx.doi.org/10.2139/ssrn.3532955

Jaan Masso (Contact Author)

University of Tartu - Faculty of Economics and Business Administration ( email )

Narva Road 4-A110
Tartu 51009
Estonia
+ 372 7 375 842 (Phone)

Jaanika Meriküll

University of Tartu - Faculty of Economics and Business Administration ( email )

Narva Rd. 4-A214
Tartu 51009, 51009
Estonia

Priit Vahter

University of Tartu - Faculty of Economics and Business Administration ( email )

Narva Rd. 4-A214
Tartu 51009, 51009
Estonia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
97
Abstract Views
574
rank
365,707
PlumX Metrics