Browsing by Subject "labor economics"

The gender wage gap is still prevalent despite increases in female educational attainment and employment rates in many countries. Recent research has studied how much of the gender wage gap is due to firm pay policies by estimating the difference in firm pay premiums that men and women receive from their employers. This is called the firm effects gap. This gap can be further decomposed into bargaining and sorting effects which measure how much of this gap in pay premiums is due to women receiving lower pay premiums than men working in the same firm (bargaining) and how much is due to women working in low-paying firms (sorting). The first part of this thesis goes over this recent literature, and based on research from different countries, it is evident that firm pay policies have a non-negligible effect on the gender wage gap. The empirical part of this thesis uses Finnish data from organized firms, which are covered by collective agreements, over the period 2012-2021 and estimates the firm effects gap and its components in the overall sample and in various subgroups. Compared to other studies, the effect of firm pay policies on the gender wage gap is moderate in the overall sample: according to highest (lowest) estimate they explain 24.9% (4.9%) of the overall gender wage gap. Gender wage gaps increase over the life cycle, but this cannot be explained by firm pay policies as the firm effects gap and its components stay roughly at the same level across age groups. Firm effects gaps are smaller among people with a higher education degree and in larger firms, but differences are small. While gender wage gaps are larger for high earners, firm effects gaps are smaller in upper wage deciles. Although collective agreements are a prevalent feature of Finnish labor markets, not all firms are covered by them. Also, the sample is restricted to organized firms, which are not the only firms covered by collective agreements due to general applicability, and many small firms are excluded. Therefore, it is unclear whether these results can be generalized to the whole private sector in Finland.