A gender wage gap decomposition for matched employer-employee data

In this paper we evaluate the extent to which the gender wage gap in the Finnish manufacturing sector is attributable to within-job wage differentials, sex differences in individual qualifications, and disproportionate concentration of women in lower-paying firms and lower-paying jobs within firms. We use matched employer-employee data to compare wage differentials between similarly qualified female and male workers who are doing similar work for the same employer. Our modelling approach employs a correlated random effects specification to account for the hierarchical grouped structure of the underlying data. (c) 2005 Elsevier B.V. All rights reserved.