Elsevier

Labour Economics

Volume 21, April 2013, Pages 86-102
Labour Economics

Gender wage gaps, ‘sticky floors’ and ‘glass ceilings’ in Europe

https://doi.org/10.1016/j.labeco.2013.01.003Get rights and content

Abstract

We consider and attempt to understand the gender wage gap across 26 European countries, using 2007 data from the European Union Statistics on Income and Living Conditions.4The size of the gender wage gap varies considerably across countries, definitions of the gap, and selection–correction mechanisms. Most of the gap cannot be explained by the characteristics available in this data set. Quantile regressions show that, in a number of countries, the wage gap is wider at the top (‘glass ceilings’) and/or at the bottom of the wage distribution (‘sticky floors’). We find larger mean/median gender gaps and more evidence of glass ceilings for full-time full-year employees, suggesting more female disadvantage in ‘better’ jobs. These features may be related to country-specific policies that cannot be evaluated at the individual-country level, at a point in time. We use the cross-country variation in the unexplained wage gaps of this larger-than-usual sample of states to explore the influence of (i) country policies that reconcile work and family life and (ii) their wage-setting institutions. We find that country policies and institutions are related to features of their unexplained gender wage gaps in systematic, quantitatively important, ways.

Highlights

► EU-SILC for 2007 used to study the conditional gender wage gap in 26 countries. ► OLS and quantile regressions used to produce explained and unexplained components ► Country work–family reconciliation policies, labour market institutions measured ► Policies and institutions help account for unexplained component of country gaps. ► Maternity leave policies do not help and may even exacerbate gender gaps.

Introduction

Labour market disparities by gender have attracted considerable political and legislative attention. In the European Union (EU) alone, two different directives, the Racial Equality Directive and the Employment Framework Directive, define a set of principles that offer legal protection against discrimination. The EU Employment Guidelines, 2003/58/EC of July 22, 2003, indicate that “Member States will, through an integrated approach combining gender mainstreaming and specific policy actions, encourage female labour market participation and achieve a substantial reduction in gender gaps in employment rates, unemployment rates and pay by 2010”. In this paper we examine the gender pay gap across European countries which can be presumed to espouse the principle of gender equality.

While a number of important studies have addressed some of these issues for some European countries (see, inter alia, Albrecht et al. (2003), Arulampalam et al. (2007), de la Rica et al. (2008), Olivetti and Petrongolo (2008), Albrecht et al. (2009), and Nicodemo (2009)), this paper focuses on the mean and median unexplained gaps, ‘sticky floors’ and ‘glass ceilings’ that can be discerned in many more European countries and relates them in a more inclusive way to country-specific wage-setting institutions and policies that reconcile work and family life. To do this effectively, it is necessary to use the maximum number of countries available so as to achieve maximum variability in the institutional and policy settings. The 2007 EU Statistics on Income and Living Conditions (EU-SILC) dataset includes information on 24 of the 2007 EU countries (all except Malta) along with Iceland and Norway. This information is available on a consistent basis for all 26 countries, thereby making it possible to implement a common econometric protocol.

We explore the degree of success of the common set of conditioning variables available in EU-SILC in explaining the wage gaps of the 26 European countries, taking care to check and address possible selection issues in a number of ways. The benchmark Oaxaca and Ransom (1994) approach is used to decompose the average wage differences between the genders. The variation in the gender-wage gap across the wage distribution is examined using quantile regression analysis, following the methodology proposed by Melly (2005). This allows us to search for possible ‘sticky floor’ and ‘glass ceiling’ effects – see Albrecht et al. (2003). With these gaps and effects established on a consistent basis across the 26 countries, we consider the extent to which they are related to various country policies and institutional features. The OECD (2001) Work–Family Reconciliation Index, initially covering 14 EU and OECD countries, is recreated for the 26 countries in our sample and is used, along with the Hierarchical Cluster Analysis of wage bargaining systems in Du Caju et al. (2009), to examine the relationship between gender gaps and effects on the one hand and country features and policies on the other. A number of sensitivity checks produce results consistent with those found in the main body of the paper.

We find that the gender wage gap is positive and significant in all countries and that it often increases once selection is taken into account suggesting that female high earners are overrepresented in selected samples. Consistent with a number of studies, the bulk of the observed wage differences cannot be explained by observed characteristics. Industry and occupation controls are, in general, important determinants of wages and gender gaps but the coefficients associated with Public Administration and Defence are such that the gender wage gap in this sector is higher in some countries, lower in others and not significantly different from that in the private sector in most countries. The Melly (2005) quantile-based wage decompositions reveal the presence of ‘glass ceiling’ and ‘sticky floor’ effects in a number of countries. These indications of female disadvantage are stronger when attention is confined to full-time full-year jobs. Looking across the 26 countries, the unexplained part of the Oaxaca and Ransom (1994) average wage gap, the unexplained median wage gap and glass ceiling effects from Melly's (2005) unexplained quantiles are systematically related to the work–family reconciliation policies and wage-setting institutions in these countries with effects which are quantitatively important.

The objective in this literature has largely been to ensure that gender-specific features of wage distributions, especially among countries which share and promote the objective of gender equality, cannot be attributed to unobserved characteristics and that unexplained effects relate truly to female disadvantage. Unfortunately, in single-country explorations with limited time and policy or institutional variation, country-specific policies and institutions must remain unobservable captured only by intercept differences among gender-specific wage equations. Some hope of narrowing down the unexplained effects exists when the experiences and policies in a large number of countries can be compared. Yet, international explorations run the risk of muddling possible gender disadvantage with data consistency problems and country differences in institutions and attitudes to gender issues. By focusing on a large set of countries with similar values and by using the same data and econometric protocols, we contribute to this important policy area by bringing to the fore the role of work–family policies and wage-setting institutions as they vary across countries.

Section 2 notes studies that follow a broad sweep across European and other countries and provides background information on the gender wage gap. Section 3 describes the EU-SILC data used and Section 4 the econometric methodology and the results obtained. Section 5 considers the relation between work–family reconciliation policies and wage-setting Institutions, and features of the wage gap. Section 6 concludes.

Section snippets

The gender wage gap: A brief survey of the literature

The literature on the gender gap is enormous. Here, attention is limited to studies with an explicit cross-country orientation; our review is indicative rather than exhaustive – see also Kunze (2008). Plantenga and Remery (2006) examine the unconditional gender wage gap for 24 EU states (except Malta) plus Iceland, Liechtenstein and Norway and survey policies that aim to reduce this gap. Brainerd (2000) examines the gender wage gap in ex USSR republics. Weichselbaumer and Winter-Ebmer (2005),

Data

The data used for the econometric analysis is the 2007 EU-SILC, prepared conformably by the statistical services of the countries involved on behalf of Eurostat. Information is available for all EU countries (except Malta) but Norway and Iceland are also included in this data set. The EU-SILC reports a wealth of information on the personal characteristics of each individual. These include age, education, marital and immigrant status, number of children, and child care details. Also, it reports

Econometric models and results obtained

We begin by estimating Ordinary Least Squares (OLS) ln hourly earnings equations, by gender, which take account of relevant characteristics available in the EU-SILC data. When the Heckman, 1974, Heckman, 1979 corrections are implemented, we use additional variables relating to family circumstances and non-labour income which account for membership in the selected, working, sample. Appropriate sample adjustments are made when the Full Time Full Year (FTFY) sample is used instead. The mean

The role of institutions and work–family reconciliation policies

The extensive literatures on the role of (i) work–family reconciliation policies and (ii) labour market institutions on labour market outcomes contain a prima facie case for considering a possible connection to the gender wage gap. Many studies consider the influence of low-cost and family-friendly policies on female participation and employment and find beneficial effects.14The availability of

Conclusion

Using data from the 2007 EU-SILC, the gender wage gap is examined for a set of 26 European countries (all 2007 member states but Malta, along with Iceland and Norway). The hourly unconditional gender wage gap in the working sample where the FTFY restriction is not imposed varies considerably across countries, ranging from 0.370 ln-wage points in Cyprus to 0.032 ln-wage points in Belgium. The median ln wage gap for the 26 country distribution is 0.148, or approximately 15%.

Our results show that

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    We thank the participants at the “Mapping the Gender Equality: Research and Practices — The National and International Perspective” International Conference, UNESCO Chair in Gender Equality and Women's Empowerment, University of Cyprus, Cyprus, the Annual Meeting of Southern European Economic Theorists (ASSET) at the University of Evora, Portugal, 27–29 October 2011, and the seminar participants at the University of Cyprus, for their valuable comments and suggestions. We have also received comments and/or code from J. Albrecht, S. de la Rica, M. Frölich, E. Gautier, P. Van Kerm, B. Melly, B. Petrongolo, A. Van Vuuren, and two anonymous referees for which we are very grateful. The views expressed in this paper are the sole responsibility of the authors and should not be attributed to the Cooperative Central Bank of Cyprus, its Board of Directors or its Management.

    1

    Christofides is a Research Associate of CESifo and a Research Fellow of IZA.

    2

    Tel.: + 357 22893668; fax: + 357 22892426.

    3

    Tel.: + 357 22743124; fax: + 357 22743138.

    4

    European Commission, Eurostat, cross-sectional EU-SILC UDB 2007 — version 1 of March 2009. Eurostat has no responsibility for the results and conclusions of this paper.

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