Abstract
Abstract. The idea that wages are determined by firm and individual characteristics suggests that there is a firm effect that influences wage differentials. This paper presents the results of an empirical analysis of gender wage differentials — based on INPS data for people between the ages of 20 and 25 employed in the private sector in 1996 — which takes into account the characteristics of workers and firms using a two‐level random‐effects model. Firm variables proved to be significant, and the proportion of females in the firm showed a negative effect on the wages of both men and women.
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