Abstract
This chapter analyses the drivers of the gender pay gap, with a particular focus on the role of firms. Section 3.1 shows how the gender pay gap and its main determinants in Estonia compare with those in other European countries. Using comprehensive administrative data, Section 3.2 analyses to what extent the gender pay gap among similarly skilled female and male employees who perform similar tasks and hold similar responsibilities reflects differences in pay practices between firms (the fact that women are employed in lower-productivity and hence lower-paying firms or industries) and differences in pay practices within firms (the fact that female employees are paid less than their male colleagues). On basis of the literature and new evidence, Section 3.3 discusses how the gender pay gap evolves over the life course and looks at the role of career breaks in explaining wage developments following childbirth for mothers rather than for fathers.
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