The Gender Wage Gap in Europe: Job Preferences, Gender Convergence and Distributional Effects
| Date | 01 June 2019 |
| DOI | http://doi.org/10.1111/obes.12282 |
| Published date | 01 June 2019 |
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©2018 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd.
OXFORD BULLETIN OF ECONOMICSAND STATISTICS, 81, 3 (2019) 0305–9049
doi: 10.1111/obes.12282
The Gender Wage Gap in Europe: Job Preferences,
Gender Convergence and Distributional Effects*
Paul Redmond†,‡ and Seamus Mcguinness†,‡,§
†Economic and Social Research Institute, Whitaker Square, Sir John Rogerson’s Quay,
Dublin 2, Ireland
‡Trinity College, Dublin, Ireland (e-mail: paul.redmond@esri.ie)
§IZA Institute of Labor Economics, Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA),
Schaumburg-Lippe-Str. 5-9, D-53113, Bonn (e-mail: seamus.mcguinness@esri.ie)
Abstract
The gender wage gap has declined over time. However, most of the remaining gap is
unexplained, partly because of gender convergencein wage-determining characteristics. In
this paper, we show the degree of convergence differs substantially across Europe. In some
countries, predominantly in Eastern Europe, the gender wage gap is entirely unexplained.
However, in other countries, differences between the characteristics of men and women
explain a relativelylarge proportion of the wage gap. Gender differences in job preferences
contribute 10% to the wage gap, which is more than job tenure, previousemployment status
or field of study. The role of job preferences is particularly strong at the top of the wage
distribution.
I. Introduction
There has been a general decline in the magnitude of the gender wage gap over time (We-
ichselbaumer and Winter-Ebmer, 2005; Kunze, 2017). However, the portion of the wage
gap explained by differences in characteristics between genders has also declined as a
result of gender convergence in wage enhancing characteristics (Blau and Kahn, 2006,
2016; Manning and Swaffield, 2008; Goldin, 2014; Kassenboehmer and Sinning, 2014;
Duraisamy and Duraisamy, 2016). In light of the declining importance of characteristics
such as educational attainment and job tenure in explaining gender wage differentials, re-
cent research has focused on finding other observable factors that could potentially explain
some of the remaining wage gap.1
JEL Classification numbers: J16, J24, J31, J71.
*We would like to thank the editor and two anonymous referees for their valuable comments which improved
the paper. We also thank Karina Doorley, Frank Walsh, Helen Russell, Dorothy Watson and Pete Lunn, as well as
participants at the ESRI seminar series (2018) and the Association of Italian Labour Economists (2017) meeting.
1For example: gender differences in competitiveness,confidence and bargaining (Babcock and Laschever, 2003;
Niederle andVesterlund, 2007; Manning and Saidi, 2010; Reuben, Wiswalland Zafar, 2017); the gender composition
of managerial staff (Abendroth, Melzer and Kalev, 2017; Quintana-Garcia and Elvira, 2017); and the segregation of
women into less profitable firms (Rycx and Tojerow, 2004).
The gender wage gap in europe 565
In this context, the role of compensating differentials may represent one component of
the ‘final chapter’ of gender pay equality (Goldin, 2014). Many high paying jobs require
individuals to spend long hours in the workplace.2This type of work can be incompatible
with family life, especially with young children, thereby forcing individuals who are –
or expect to be – caregivers to trade off job characteristics, such as higher earnings, for
other characteristics that facilitate a more flexible work–family balance. As women are
still expected to play the primary caregiving role in many households (McCrae, 2003),
compensating wage differentials may be an important factor in explaining the remaining
gender wage gaps observed across countries. Goldin (2014) suggests that policies which
change how jobs are structured, such as greater flexibility, could reduce the gender wage
gap by allowing women to combine high earning careers with family obligations.
In this paper, we utilize the 2014 European Skills and Jobs Survey (ESJS) to study the
gender wage gap in 28 EU countries. Our research makes three contributions. Firstly, we
study the degree of gender convergence in wage enhancing characteristics across Europe
and their role in explaining the gender wage gap. For some countries, predominantly in
Eastern Europe, the wage gap remains entirely unexplained. However, in other countries, a
relatively large proportion of the wagegap is attributed to differences in wage-determining
characteristics of men and women. Secondly, we contribute to the literature on compen-
sating differentials by examining the role of job preferences in explaining the gender wage
gap. We find that women place greater value than men on jobs that are close to home
and offer good security, and these job preferences are associated with lower wages. The
gender wage gap among full-time employees in Europe is approximately 13%, and gender
differences in job preferences contribute approximate 1.2 percentage points to this wage
differential.3This is greater than the explained component relating to previous employment
status and job tenure.
It is important to note from the outset that when we talk about the ‘explained com-
ponent’ of factors such as job preferences, we are not making direct causal arguments.
As noted by Chevalier (2007), gender differences in preferences should not be taken as
evidence that women are not discriminated against, as these choices could themselves be
due to discrimination or societal pressures. For example, the fact that womenhave stronger
preferences for finding a job close to home could be driven by a societal expectation that
women take on the primary role in childrearing.
Our third contribution is to carry out unconditional quantile decomposition on the
gender wage gap using a technique introduced by Firpo, Fortin and Lemieux (2009).While
the Oaxaca decomposition focuses on the average wage gap, our quantile analysis allows
us to study the full wage distribution. Our results show a U-shaped wage gap whichis high
at both the top and bottom of the wage distribution. Job preferences are shown to play a
particularly strong role at the top of the wage distribution.
2Maestas et al. (2017) find that for almost 80% of workers in the US, presence at the workplace during regular
business hours is a requirement of the job and only a minority of workers havethe option of working from home.
3The gender wage gap in Europe is lower than in the US (see, e.g. Weichselbaumer and Winter-Ebmer, 2005;
Olivetti and Petrongolo, 2008).The average wage gap found in our paper closely resembles the wage gap calculated
using Eurostat’sestimates from the 2014 Structure of Earnings Survey (13%). This supports the representative nature
of the ESJS data.
©2018 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd
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