Gender wage gap studies: consistency and decomposition

Summary

Astrid Kunze's 2008 paper, "Gender wage gap studies: consistency and decomposition," critically examines the empirical literature surrounding the gender wage gap, with a particular focus on the identification of key parameters within human capital wage regression models. The paper emphasizes the significant challenges researchers face in accurately measuring this gap due to methodological complexities. A core aspect of the paper's review centers on the endogeneity of crucial explanatory variables in wage models, such as measures of work experience and time-out-of-work. Kunze argues that applying traditional estimators without accounting for this endogeneity can lead to inconsistent parameter estimates. Furthermore, the paper highlights that empirical evidence on the gender wage gap often relies on estimates whose economic meaning may be limited by restrictive assumptions incorporated into the wage models. This presents a considerable challenge for both researchers seeking to understand the root causes of the wage gap and policymakers aiming to develop and implement effective equality policies. The need for precise and consistent measures of the gender wage gap is underscored as fundamental for creating impactful interventions. The paper implicitly advocates for more robust econometric approaches that can address these endogeneity issues and provide more accurate insights into the factors contributing to the gender wage gap, including potential discrimination. While the paper itself is a review, discussions citing it often point to the Oaxaca-Blinder decomposition analysis as a method used in related studies to determine the discrimination component of wage disparity.