The Gender Pay Gap: Micro Sources and Macro Consequences
112 Pages Posted: 22 Sep 2021
Date Written: July 2021
We document that a large share of the gender pay gap in Brazil is due to women working at lower-paying employers. However, compared with that of men, women's revealed-preference ranking of employers is less increasing in pay. 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: compensating differentials, discrimination, Empirical Equilibrium Search Model, Linked employer-employee data, Misallocation, Worker and Firm Heterogeneity
JEL Classification: E24, E25, J16, J31
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