9/2014 Jaanika Meriküll and Pille Mõtsmees. Do you get what you ask? The gender gap in desired and realised wages
Working Papers of Eesti Pank 9/2014
This paper will study the gender wage gap in desired wages, realised wages and reservation wages. The notion of desired wages shows workers’ first bet to potential employers during the job-search process. Two datasets are employed, the electronic job-search portal database, where individuals signal their desired wages, and the labour force survey, where realised wages and reservation wages are reported. The Oaxaca-Ransom decomposition is implemented to investigate the contribution of characteristics and coefficients to the gender gap. It is found that: (1) The unexplained gender wage gap is 22–25% in desired and realised wages. (2) The unexplained gender wage gap is much larger in desired wages than in reservation wages for unemployed individuals showing women’s higher disutility from unemployment. (3) Women’s lower desired wages are revised up rather than men’s higher desired wages being revised down on the job. The results suggest that women are more risk averse in wage bargaining and self-select into occupations and industries with stable employment.
JEL Codes: J16, J13, D13, J31
Keywords: gender wage gap; reservation wage; family, marriage and work; labour market mobility