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Can the Workplace Explain Canadian Gender Pay Differentials

Can the Workplace Explain Canadian Gender Pay Differentials...

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Can the Workplace Explain Canadian Gender Pay Differentials? Marie Drolet Canadian Public Policy, Suuplement May 2002 Numerous previous research has shown that while the gap is narrowing, “a sizeable portion of the difference in the pay men and women receive cannot be explained by gender differences in individual characteristics.” Human capital characteristics have been firmly established as important in the wage determination process. “Over the past decade, the persistence of inter-industry wage differentials after controlling for differences in human capital has been documented.” Poor data has made it difficult to document other firm characteristics on wages and their influence on the gender gap. The Workplace and Employee Survey fills this data gap and is the first large-scale, Canadian-linked employer-employee survey connecting the employee outcomes to the activities of the workplace.” Literature Review Earlier studies have focused on gender-pay differentials by focusing on differences in the wage-determined characteristics of men and women and how these are rewarded. 2 stylized facts emerge: 1. A substantial portion of gender pay differences cannot be explained by observable differences such as experience, education, and demographics. 2. The reduction in differences was mainly accomplished by a decline in the difference in returns to the wage-determining characteristics.
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A number of studies have found that women are concentrated in low-paying occupations and industries and gender segregation accounts for a significant portion of the overall differences. Different studies have concluded that these factors account for anywhere from 25% to virtually all the differences. Canadian data tends to support this result particularly for gender segregation at the establishment level which may account for about a quarter of the differences in wages. There is also evidence that more women working in an establishment may lower the wages of both women and men. Data and Sample The WES sample includes 5,815 private sector, non-agriculture establishments with at least one employee responding. There are almost 25,000 responding employees. The sample for this paper includes paid workers 18-64. The sample contains slightly more men than women and about 10% of the establishments have only 1 employee. The analysis is based on total compensation before taxes the last 12 months. Estimating Method The author has estimated the wage structure of men (m) and women (w) using a semi-log form: ik ik ik ik e Z X w + + + = δ β α ln Where w ik = hourly wage rate of worker i in workplace k X ik = vector of individual-specific characteristics of worker I and workplace k Zk = characteristics of workplace k for worker i Β and δ are the coefficients of the characteristics e is the error term There are K workplaces.
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