The Gender Pay Gap: Micro Sources and Macro Consequences

112 Pages Posted: 22 Sep 2021

See all articles by Iacopo Morchio

Iacopo Morchio

University of Bristol - Department of Economics

Christian Moser

Columbia University; Federal Reserve Bank of Minneapolis; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

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

Suggested Citation

Morchio, Iacopo and Moser, Christian, The Gender Pay Gap: Micro Sources and Macro Consequences (July 2021). Available at SSRN:

Iacopo Morchio (Contact Author)

University of Bristol - Department of Economics ( email )

8 Woodland Road
Bristol BS8 ITN
United Kingdom

Christian Moser

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States
6093564653 (Phone)


Federal Reserve Bank of Minneapolis ( email )

90 Hennepin Avenue
Minneapolis, MN 55480
United States


Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

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