Discrimination and efficiency wages

Gender Gaps Conference was a joint effort of GRAPE and IBS. We believe that the conference was successful in many regards, from attracting talented researchers to delivering nice sessions. Of course, you do not have to take our word for it (especially given the probable bias :) ), just read below.

Gender Gaps Conference was characterized not only by the quality of the presentations, but also by their variety, both in terms of the topics of discussion and in their approach, which comes to demonstrate how broad the literature on Gender Gaps can be. The keynotes, Jill Rubery and Nuria Rodriguez-Planas, are good examples of this variety, as it was demonstrated in the speeches they delivered.

• Jill opened the conference with a magnificent discussion of the evolution of the Gender wage gap in the United Kingdom in the last 40 years. Her speech, which set the tone of the entire conference, focused not only on the economic determinants of the gender wage gap, namely female underinvestment in human capital; but also on other sources of inequality at the institutional (laws) and organizational level (within firms). During her presentation, she introduced numerous examples of "moving goal posts", that is while women experienced some progress in certain aspects, such as their larger investments in education, new sources of inequality arise. As a result, progress in one area is often counterbalanced by regression in others. These developments, she argued, reflect the "unending capacity of gender inequality to reproduce itself", which calls for constant action of improving the situation and preventing a deterioration of the situation.
• The conference was concluded by a wonderful keynote address by Nuria, who exploited another type of gender gap, not so closely related to the labour market: the gap in smoking. By all standards, men are more likely to smoke than women, however the author argues that the gap is closing fast: the proportion of smoking women is expected to double over the next decade, while no significant changes for men are forecast. Understanding the reasons behind this development could help in designing policies to curb this trend and prevent its negative effects. Using a sample of second generation (teenage) migrants residing in Spain, she showed that cultural background mattered. Girls whose parents migrated from more gender equal countries (Sweden) were more likely to smoke, ceteris paribus. This finding has clear political implications. Campaigns looking to prevent the rise in smoking behavior should be tailored to each gender.

Variety was not feature only of the keynote speakers. The conference also attracted a wide range of participants, from accomplished researchers such as Olivier Bargain (from Aix Marseille University) to young PhD students. The quality of the presentations by PhD's made selecting a paper for the Best PhD paper prize  a particularly challenging task for the Scientific Committee. To check the winners and a summary of their research follow this link. Sadly, an exhaustive list of all the contributions is beyond the scope of this report. But, you can always see for youself.

Perhaps the most salient feature of the conference was the level of the discussions that ensued most presentations. This was not only related to the presence of discussants (who more than fulfilled their role), but prominently to the interventions of other presenters and the keynote speakers, who provided valuable comments on almost every article. This level of engagement raised the level of the conference and make it more enjoyable and useful for participants. And for this, we, as organizers, can only be thankful to all those that took part in the Gender Gaps Conference.

During the closing ceremony of the Gender Gaps Conference, the prize for the best PhD paper was given. Or should we say were given... The quality of the presentations was such that the Scientific Committee had serious difficulties determining a sole researcher to give the prize to. Instead, the 1000 Euros were distributed equally among three recipients (in alphabetical order).

Aspasia Bizopoulou is a young scholar with Greek descendence. Sh completed her BSc in Economics & Philosophy at the University of Warwick in 2012. Afterwards, she moved to Utrecht, where she completed her M.A. in Economics. Since October 2014, Aspasia is pursuing PhD studies at the University of Edinburgh. Her research is primarily on the topic of Labour, Gender and Education Economics. During the Gender Gaps Conference, Aspasia presented her research showing that men and women tend to specialize into different tasks within narrowly defined occupations. More importantly, women seem to perform less of the tasks that are being more valued in the market, i.e. those related to numeracy.

Recent literature for the US, Germany and Australia shows that a significant proportion of the unexplained gender wage-gap can be found within very narrowly defined occupations. I find that this pattern also holds true in European countries. This finding raises the question of why men and women working in very similar jobs are paid substantially different wages. Using a newly available dataset with detailed job-task and occupational information, I investigate whether task segregation by gender within a narrowly defined occupation can account for within-occupational gender wage-gaps. I find that higher levels of task segregation by gender increase the wage-gap within an occupation, in favour of men. I also find that, within occupations, the effect of task segregation on wages is driven by certain tasks that carry a significant wage premium and which are consistently performed by men much more than by women.

[Presentation] | [Full paper]

Diogo Geraldes’ research lies at the intersection between economics and psychology, and uses tools of economic experiments and game theory. In his Ph.D. dissertation,Diogo has been investigating men’s and women’s attitude towards competition, and its implications for the labor markets and the educational programs in which women are under-represented. During the Gender Gaps Conference, Diogo discussed the results of a lab experiment showing that women are not less competitive than men, as commonly argued to justify the shortage of women in leading positions. Instead, he presented evidence that women simply dislike competing against men.

A prominent finding in the literature on gender competition is that women are less inclined to compete in comparison to men. In this paper, we conduct a laboratory experiment to examine the importance of the belief in the sex of potential competitors on men’s and women’s decision to enter into competition. Specifically, we test whether women have a weaker preference to compete per se, or rather just shy away from competing against men. The results support the latter hypothesis. When given the possibility to choose a competitor’s sex, or when being in the lab surrounded only by female participants, the percentage of women entering into competition is high and similar to the figures commonly reported for men. Moreover, only women are sensitive to the different cues we provide concerning the sex of potential competitors, and their competitiveness is largely driven by their beliefs in other women’s competitive attitude. Our findings have important policy implications for the labor markets and educational programs in which women are under-represented. They suggest that persuasive references to recent female applicants and/or hiring of female staff while advertising a position could be more effective to promote women’s participation than on-going interventions highlighting women’s under-representation.

[Presentation] | [Full paper]

Andrea Siebert  studied economics and German literature at the Ruhr-Universität Bochum from 2007 to 2013 and spent a semester abroad at the Université de Rennes, France. Since 2014, she works as research assistant and is a doctoral student at the Westfälische-Wilhelms Universität Münster. Her research interests include labor market economics, the gender wage gap, and wealth inequality. During the Gender Gaps Conference, Andrea presented a paper where she studies the motherhood wage penalty and the role of motherhood timing for labor market outcomes. She finds that the motherhood penalty is due to mothers having a lower wage growth than they could have had if they remained childless. Moreover, a delay in the time of birth is associated with higher wages. She also explores for heterogeneous effects, just to discover that the effects are stronger in the case of migrants.

Although we have observed an increase in gender equality on the labour market, like rising participation rates of women, and a narrowing of the gender wage gap, there is substantial evidence of a wage penalty for women once they have children. In order to shed light on the effect of motherhood timing on career outcomes, this paper investigates whether postponing the first birth mitigates the negative effect of having children on wages. Using data from the German Socio-Economic Panel (GSOEP) for the years 1991- 2013, I estimate a fixed-effects model that allows to reveal the underlying mechanisms of the motherhood wage penalty. To control for factors that simultaneously influence childbirth and wages, I include measures for changes in wage growth before childbirth. Since the age at first birth is time-invariant, I allow the motherhood wage gap to vary by age at first birth. Additionally, I test for self-selection into the labour market. The results indicate that a postponement of the first birth narrows the motherhood wage gap and thus, has a positive influence on female wages. Nevertheless, the results indicate that high-productive women who give birth later in life self-select out of the labour force.

[Presentation] | [Full paper]

We wish them plenty of success in their research and hope to meet them in future editions of the Gender Gaps Conference.

Opublikowane | Published

Estimator

Gender wage gap (adjusted for individual characteristics) as a phenomenon means that women are paid unjustifiably less than men, i.e. below their productivity. Meanwhile, efficiency wages as a phenomenon mean that a group of workers is paid in excess of productivity. However, productivity is typically unobservable, hence it is proxied by some observable characteristics. If efficiency wages are effective only in selected occupations and/or industries, and these happen to be dominated by men, measures of adjusted gender wage gaps will confound (possibly) below productivity compensating of women with above productivity efficiency wage prevalence. We propose to utilize endogenous switching models to estimate adjusted gender wage gaps. We find that without correction for the prevalence of efficiency wages, the estimates of the adjusted gender wage gaps tend to be substantially inflated.

It appears plausible that efficiency wages may be more relevant for men — whereas women may value more some other attributes of work both as incentive to avoid shirking. This would imply that a part of wage differential typically unexplained by observable characteristics could actually reflect wages of men in excess of marginal productivity (efficiency wages) and not discriminatory pricing of women’s work.

While this hypothesis is by no means new, it is challenging to address empirically. Typically, efficiency wages are not identified directly. In standard wage datasets, such as linked employer-employee data or labor force survey, prevalence of efficiency wages may be confirmed or rejected, but usually not attributed to respective workers. Indeed, individual productivity is rarely observed, thus making it impossible to judge if wage exceeds it. Moreover, clearly, if there is sorting, even identifying productivities is not going to help much due to endogeneity. A class of full information maximum likelihood estimators with endogenous switching provides consistent estimators of returns to individual characteristics, accounting simultaneously for selection and wage determination, but these models require that the data comprises assignment between the markets, e.g. unionized vs non-unionized workers, public vs. private sector, etc.

We propose an estimator of gender wage gap, which accounts for bias stemming from a separation between a privileged and standard labor markets, when this separation is endogenous and a priori unknown (unobservable). We analyze estimates of the gender wage gaps in European countries using linked employer-employee data for the European countries (EU SES). Thus, we address an important concern implicit in the previous literature that the estimates of adjusted gender wage gap are inflated by the incidence of efficiency wages.

Derivation

Matlab code