Gender pay gaps in the young adult labor force: prejudice-based discrimination or misreading of the observed-to-offered wage relationship?

Abstract

We examine the plausibility of using prejudice-based discrimination to explain the wage differences among young men and women in eleven European countries. Utilizing a sample of over 20,000 individuals and estimating a series of country-specific regression models that adjust for ability and selection bias, we find evidence that leads to a good possibility of prejudice-based discrimination in Greece, Italy, Spain, Czechia, Hungary, and the UK. In the UK, this possibility of discrimination is mitigated to an extent by gender differences in credentials. In Austria, Germany, Denmark, and Switzerland, we find no evidence for prejudice-based discrimination. Oaxaca decompositions reveal that if women’s own human capital characteristics were rewarded at the same level as men’s in the former (six) countries, they would expect a wage gain. © Oxford University Press 2024. All rights reserved.

Keywords

Author Keywords

soft skills gender pay gap Oaxaca decomposition prejudice-based discrimination selection bias work values

Index Keywords

human capital adult United Kingdom Germany skilled labor Switzerland gender disparity wage gap young population Italy Hungary Spain Greece Austria decomposition analysis Czech Republic Denmark

Author Affiliations

Edward J. Bloustein School of Planning and Public Policy, New Brunswick, NJ, United States

Department of Agriculture, Rutgers University–New Brunswick, New Brunswick, NJ, United States

Yale School of the Environment, New Haven, CT, United States

Funding & Acknowledgements

European Commission, EC

In this article, we examine the role that self-reported credentials might play in the pay gap difference between young men and women (ages 18\u201335\u2009years) in eleven European countries. Our specific focus is on estimating how much of this differential is due to (1) stocks of human capital that distinguish the sexes and, by extension, their relative productivity and (2) prejudice against women that results in pay discrimination (; ; ). We attempt to identify credential\u2019s relative contributions to the former, that is, the hypothetical wage gain of women if they exhibited men\u2019s human capital characteristics and the latter, that is, the hypothetical wage gain of women if their own characteristics were remunerated like men\u2019s (wage discrimination). We use a unique set of data collected through the Cultural Pathways to Economic Self-sufficiency and Entrepreneurship (CUPESSE) Project. This 2017\u20138 survey, funded by the European Commission, captures the labor force attachment perceptions and experiences of 20,008 young men and women (ages 18\u201335\u2009years) from eleven European countries, viz., Austria, Czechia, Denmark, Germany, Greece, Hungary, Italy, Spain, Switzerland, Turkey, and the UK. In addition to information on respondents\u2019 work history, earned income, educational attainment, and work experience, the CUPESSE project collected data on respondents\u2019 assessment of their overeducation, the possession of a variety of soft skills and the work values that orient their job-seeking behaviors. Detailed information on the CUPESSE project research goals and methodology can be found in and .

References 10 References

1 Baker, Michael, How does job-protected maternity leave affect mothers' employment?, Journal of Labor Economics, 26, 4, pp. 655-691, (2008)

2 Baldwin, Marjorie L., Estimating the employment effects of wage discrimination, Review of Economics & Statistics, 74, 3, pp. 446-455, (1992)

3 Baldwin, Marjorie L., Labor market discrimination against men with disabilities in the year of the ADA, Southern Economic Journal, 66, 3, pp. 548-566, (2000)

4 Gender Pay Gap in U S Held Steady in 2020, (2021)

5 Economics of Discrimination, (1957)

6 Human Capital A Theoretical and Empirical Analysis with Special Reference to Education, (1964)

7 Accounting for Tastes, (1996)

8 Becker, Gary S., Explaining the worldwide boom in higher education of women, Journal of Human Capital, 4, 3, pp. 203-241, (2010)

9 Bertrand, Marianne, New perspectives on gender, Handbook of Labor Economics, 4, PART B, pp. 1543-1590, (2011)

10 Blau, Francine D., The gender wage gap: Extent, trends, & explanations, Journal of Economic Literature, 55, 3, pp. 789-865, (2017)

Gender pay gaps in the young adult labor force: prejudice-based discrimination or misreading of the observed-to-offered wage relationship?

How to Cite