The Gender Gap in Earnings

Abstract

The gender income gap is a much debated subject both at an analytical and economic level. This article considers both, but emphasizes the different ways the data can be analyzed. The authors show that a hierarchical linear model is the best way to evaluate male-female wage differentials. Both interindustry and intraindustry wage disparities between men and women are measured by using a technique that assumes that observations within the same industry have correlated error terms. By simultaneously testing human capital factors and environmental factors, the analysis model serves as a link between theory and empirical analysis. The results show that the wage differences are larger in some industries than in others, so that it can be assumed that a gender income gap is not only a function of individual differences in qualification, but also differences between industries. The between-industry differences in gender income gaps contradict the hypothesis that gender income differential is largely due to female work preferences and the resulting segregation.