Changes in Workplace Heterogeneity and How They Widen the Gender Wage Gap
- American Economic Journal: Applied Economics (Forthcoming)
Using linked employer-employee data for West Germany, I investigate the role of growing wage differentials between firms in the slowdown of gender wage convergence since the 1990s. The results show that two factors are at play: First, high-wage firms experience higher wage growth and employ disproportionately more men, and second, male premiums grow faster than female premiums in the same firms. These developments were catalyzed by a decline of union coverage, coupled with more firm-specific wage-setting in collective bargaining agreements. Taken together, these conditions prevented the gender gap from narrowing by approximately 15 percent between the 1990s and 2000s.
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