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

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  • Maroto, Marco A. Badilla

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.

Suggested Citation

  • Maroto, Marco A. Badilla, 2020. "The role of the gender wage gap in overall wage inequality: a quantitative exercise," LSE Research Online Documents on Economics 123133, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:123133
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    References listed on IDEAS

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    1. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(2), pages 553-609.
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    3. Erling Barth & Alex Bryson & James C. Davis & Richard Freeman, 2016. "It's Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 67-97.
    4. Marianne Bertrand & Claudia Goldin & Lawrence F. Katz, 2010. "Dynamics of the Gender Gap for Young Professionals in the Financial and Corporate Sectors," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 228-255, July.
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    More about this item

    Keywords

    gender; inequality; restriction; occupation;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy

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