Explaining the Male-Female Wage Gap: Job Segregation and Solidarity Wage Bargaining in Sweden

Abstract

The fundamental issue addressed in this paper is why women receive lower wages than men. The relevance of four explanations is investigated: women's responsibility for family and household work, women's lower human capital, compensating wage differentials between men and women, and job segregation The job segregation explanation is given primary attention in these analyses, given that solidarity wage bargaining in Sweden is generally assumed to have promoted equal pay for equal type of job, and hence that no male-female wage differentials ought to exist once the relevant job characteristics are controlled for. Empirical analyses, based on Swedish labour-market data in 1981, show that job segregation indeed explains a sizeable proportion of the gender wage gap, much more than the other three types of factors. A substantial unexplained residual remains, however, net of a large number of individual, family, job and industry characteristics. It is argued that this unexplained wage differential is too large to be explained by misspecification or coarseness of measures The most reasonable interpretation instead is that male and female workers with the same productive attributes, family obligations, and job characteristics receive different hourly wages. The result thus indicates the presence of sex discrimination in the Swedish labour-market, i.e., that solidarity wage bargaining, even at its peak in 1981, did not result in equal treatment of men and women