Methods for estimating the the scope of inequality in various outcome measures such as income, education, health or poverty are fairly accurate in detecting differences adjusted for individual characteristics. However, the actual estimated inequality may depend on the interaction between (the weakness of) the method and (the weakness of) the institutional environment. We make a case by comparing the country rankings for the adjusted gender wage gap among 23 EU countries. We show that the effects of these interactions are indeed large by comparing the estimates from various methods obtained from the same database. In fact, depending on the control variables and estimation method, a country may change its position in the ranking by as much as 10 positions -- both towards greater equality and towards greater inequality. We argue that this variability in country ranking position may yield important policy insights into prioritizing intervention. We also infer that given the intimate and unbreakable relationship between institutional deficiencies and features of the adjustment methods, ranking per se may be misguiding the public debate and thus should be abandoned or substantially refined.
Gender wage gaps are typically measured by the means of decomposition. Proliferation of methods makes the choice of the correct estimator for a given data a conceptual challenge, especially if data availability necessitates simplifications. The challenge lies in accounting for observable differences adequately, which in itself is not only a data issue, but also a conceptual issue. Ideally, one would want to compare men and women actually “alike” in terms of all relevant characteristics, including hours effectively worked, commitment, talent. However, many of these characteristics are not observable (or are imperfectly measured, e.g. human capital).
Decompositions are prone to multiple risks. For example, the urge to compare only the comparable implies that a decision needs to be made about the use of observations which clearly are not comparable. Nopo (2008) proposes to use these observations to infer about the possible selectivity in this process, but alternative approaches consist of reweighing or neglecting this issue. Similar choices concern the treatment of distributional issues. Finally, for the parametric methods, the dependence on the functional form may influence the results as well. Consequently, depending on the features of a given labor market, an estimate of gender wage gap obtained with a given method is likely to overstate or understate the extent of true unjustified inequality in wages.
We make available a dataset which provides a full selection of gender wage gap estimates for the EU countries, using data from EU-SILC. Across countries and years, everybody can see for themselves, what is the source of the gender wage inequality in a given European country. We provide:
- A dta file with the full set of estimates for the gender wage gaps and a generating dofile
- Data documentation
Unpublished version
Published version
Working time flexibility and inequality
Badania porównawcze ujawniają dwie uderzające własności nierówności na rynku pracy: nierówności występują praktycznie wszędzie i zmieniają się bardzo powoli. Gdy uwzględni się te różnice, a płace nadal pozostają nierówne, rodzi się potrzeba zrozumienia natury tego zjawiska. Jedno z potencjalnych wyjaśnień zaproponowała Claudia Goldin: na niektórych stanowiskach wymagana jest znaczna doza dyspozycyjności. Pracownicy, którzy z różnych względów nie są w stanie sprostać temu oczekiwaniu (np. pełnienie funkcji opiekuńczych, uczestniczenie w edukacji) uzyskują niższe wynagrodzenie, niż pozostali. Czy nierówności na rynku pracy można wytłumaczyć rozbieżnościami pomiędzy wymogiem dyspozycyjności po stronie pracodawcy i zdolnością do bycia dyspozycyjnym po stronie pracownika?
With Claudia Goldin's presidential address, a new literature flourishes on the role played by time endowments in determining wage inequality.There appear to be higher rewards to working long hours, but also from rewards to working specific hours. An indirect effect of such pattern is that workers will sort into different jobs not only according to their productivity, but also due to their expected time availability. Expecting greater time constraints some workers might sort into occupations that provide lower returns to working long hours, at the expense of lower wages.
We want to take seriously Claudia Goldin's conjecture, that unequal wages are due to working hours frictions, rather than due to pure discrimination.
Goldin (2014, AER) argues that societies have made a remarkable progress in closing the wage and employment gaps in the last fifty years; yet, they have failed to achieve full labor market equality. Goldin boils down the remaining difference to the concept of time flexibility, which should be understood both from employee and the employer perspectives. For example, primary care givers have lower time endowment to allocate to market work. By the same token, groups disadvantaged due to remote location, disability etc. may be at disadvantage when compared to workers without such handicaps. While the conjecture of Goldin is attractive, empirical evidence is scarce and at times contradictory. In this project, we provide a battery of tests Goldin’s conjecture, analyzing the role of working time flexibility in determining wages and employment.
First, from an employee perspective, we hypothesize that demand for flexibility varies at different stages of the life-cycle. If the demand for flexibility indeed drives the (adjusted) wage gaps, then one expect a life-cycle pattern in adjusted wage gaps. In the absence of flexible arrangements, the demand for flexibility might also be reflected in more selective employment patterns. This hypothesis will be tested empirically, with the use of a novel proposed estimation method, which allows to isolate age, cohort and time effects in adjusted wage gaps. The study will be done for a wide variety of countries. Second, also taking the employee perspective, we will infer the true value of working time flexibility to workers. Non-standard work arrangements allow to engage in other spheres of life, but in many societies carry a social stigma. We will propose a large-scale framed field experiment to infer the true value of working time flexibility among workers, controlling for their outside options and household situation.
Third, from an employer perspective, we formulate the hypothesis that managers from a disadvantaged group will not tolerate high wage penalty on time inflexibility among their subordinates. To this end, we will develop and utilize a novel dataset on female managers across Europe and industry-level adjusted gender wage gaps (as well as their between firm dispersion). We will provide a variety of identification strategies to inspect the causality in this relationship.
Fourth, from a household perspective, taxes and social transfers may disproportionally tax the second earner’s labor supply, thus making it disadvantageous to supply labor. So may the childcare costs. We will extend a standard tax-benefit microsimulation model to account for the latter for a selection of the European countries, thus obtaining a shadow price of working time flexibility across countries. Finally, fifth, we will analyze the links between the supply of flexible work agreements and labor market inequality. We will explore ways flexible working arrangements influence labor market inequality across the EU, including selective patterns of employment, changes in within gender inequality and assortative mating.
The project contributes to the literature in three respects. First, we provide a wide battery of tests to an important hypothesis concerning the origins of labor market inequality in a wide, comparative context across countries. Second, we provide several methodological innovations (concerning estimation techniques and identification strategies) as well as methodological diversity (econometrics, simulations and experiments). Third, we will separate the role of the supply side factors (on the side of the employers) from demand side factors (the working time flexibility to combine personal and professional life).
The benefits of international cooperation are threefold. First, the teams complement each other in terms of skills, which permits pushing the frontier of research. Second, given the international composition of the team, the comparative economics angle can be based on local expertise on top of being data driven. Third, the capacity building for both partners will permit broader reach of this and future research in the field, thus contributing to the internationalization of Polish and Lithuanian science in our field.
@article{
title={How to make a country look equal},
author={Tyrowicz, Joanna and Goraus, Karolina and van der Velde, Lucas},
year={2020},
publisher={PLOS ONE}
}