The role of the gender wage gap in overall wage inequality: a quantitative exercise

Maroto, Marco A. Badilla (2020) The role of the gender wage gap in overall wage inequality: a quantitative exercise. Economía, 21 (1). 169 - 207. ISSN 1529-7470

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Abstract

This article presents a novel wage inequality decomposition to analyze the impact of the gender wage gap on overall wage inequality. The decomposition determines the maximum relative wage between genders allowed before it begins to increase total inequality. In addition, I present a structural model of the labor market to evaluate the impact of establishing restrictions on intra-occupational gender pay gaps within each firm. Specifically, I introduce a restriction in which the average wage of one gender cannot exceed á times the average wage of the other gender. For α = 2, the model predicts a 10 percent wage inequality reduction. However, with a tighter restriction of α = 1, the inequality reduction dissipates and reverses into a wage inequality increase.

Item Type:	Article
Official URL:	https://economia.lse.ac.uk/
Additional Information:	© 2020 LACTEA
Divisions:	LSE
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor
JEL classification:	J - Labor and Demographic Economics > J1 - Demographic Economics > J16 - Economics of Gender; Non-labor Discrimination J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc. D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E64 - Incomes Policy; Price Policy
Date Deposited:	23 Jul 2024 13:36
Last Modified:	23 Jul 2024 13:36
URI:	http://eprints.lse.ac.uk/id/eprint/123133

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