Abstract
We present empirical evidence that large structural shocks are followed by changes in labor market inequality. Specifically, we study short-run fluctuations in adjusted gender wage gaps (unequal pay for equal work) following episodes of structural shocks in the labor markets, using several decades of individual data for a wide selection of transition countries. We find that for cohorts who entered the labor market after the onset of transition. Labor market shocks lead to significant declines in the gender wage gap. This decrease is driven mostly by episodes experienced among cohorts who enter the labor market during the transition. By contrast, we fail to find any significant relation for cohorts already active in the labor market at the time of transition. We provide plausible explanations based on sociological and economic theories of inequality.
Highlights
From a sociological perspective, discrimination typically derives from power differences, which, in turn, derive from the positions that the privileged and the disfavored occupy in a society (Reskin and Bielby 2005)
We focus on gender wage gaps due to its paramount policy relevance and because gender equality is relevant for each economy, whereas some countries might lack sufficient representation of, e.g., minorities
We further propose that the link between massive labor reallocation and gender wage inequality is strong for those who are more exposed to these large structural shocks
Summary
When Opportunity Knocks: Confronting Theory and Empirics about Dynamics of Gender Wage Inequality. Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. Supported by the Deutsche Post Foundation, IZA runs the world’s largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author
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