Understanding the Role of Firms in the Gender Wage Gap Over Time, Over the Life Cycle, and Across Worker Types

42 Pages Posted: 9 Nov 2021 Last revised: 29 Mar 2022

See all articles by Marco Guido Palladino

Marco Guido Palladino

Department of Economics, Sciences Po-CNRS

Alexandra Roulet

INSEAD

Mark Stabile

INSEAD; National Bureau of Economic Research (NBER)

Date Written: October 2021

Abstract

Evidence across many jurisdictions suggests that firm pay premiums contribute meaningfully to the gender wage gap and that this is largely driven by sorting of women into lower paying firms rather than within firm gender differences in pay premiums. We build on this evidence using a cluster-based approach which allows us to relax the usual sample restrictions, to use repeated 2 year panels to examine how the contribution of firms to the gender wage gap has changed over time, to compute age-specific estimates of the gender gap in firm pay premium to document changes over the life cycle, and to explore whether there are complementarities between worker types and firm effects and how these differ by gender. We show that lifting the dual connected set restriction reveals a slightly larger contribution of firms to the gender wage gap, and more strikingly a higher within firm component. Further, the gender gap in firm pay premiums remained fairly constant between 1995 and 2015 (as did the decomposition of this gap) but represents an increasing share of the overall gender wage gap over time. It increases with age, exclusively driven by an increase of the sorting of women into lower paying firms. Finally we find limited evidence of complementarities for both men and women.

Keywords: Bargaining, discrimination, firm pay premium, gender wage gap, sorting

JEL Classification: J16, J31, J71

Suggested Citation

Palladino, Marco Guido and Roulet, Alexandra and Stabile, Mark, Understanding the Role of Firms in the Gender Wage Gap Over Time, Over the Life Cycle, and Across Worker Types (October 2021). CEPR Discussion Paper No. DP16671, Available at SSRN: https://ssrn.com/abstract=3960275

Marco Guido Palladino (Contact Author)

Department of Economics, Sciences Po-CNRS ( email )

28 rue des saints peres
Paris, 75007
France

Alexandra Roulet

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Mark Stabile

INSEAD ( email )

Boulevard de Constance
F-77305 Fontainebleau Cedex
France

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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

Paper statistics

Downloads
0
Abstract Views
595
PlumX Metrics