Decomposition of gender wage gap in Poland using counterfactual distribution with sample selection

Researchers investigating the wage gap in Poland have found significant gender differences. Women are paid only a part of what men with similar demographic characteristics, family situations, work hours, educational levels and work experience are paid. They also thought that self selection into the labour force is crucial for the gender pay gap. If all women participated in the labour force, the observed gap would be larger.

Previous researchers in Poland focused on decomposing the gender pay gap at the means of the wage distribution using a procedure developed by Oaxaca (1973) and Blinder (1973). Using this method the gender wage gap could only be partially explained by differences in men’s and women’s characteristics. The unexplained part of the pay gap was usually attributed to wage discrimination. Later, attention shifted to investigating the degree to which gender pay gaps might vary across the wage distribution. Various techniques for the decomposition of differences in income distributions were considered but they lack women self selection (Fortin, Lemieux, Firpo 2010).

The objective of this study is to extend the Oaxaca-Blinder decomposition procedure to different quantile points along the income distribution. The employment rates in Poland differ by gender and the sample selection is a serious issue for the study (Albrecht, van Vuuren, Vroman 2009). Therefore our decomposition approach will be adjusted for sample selection problems. The results will show that the wage gap is wider at the top of the wage distribution.

The analysis will be based on the data collected by the European Union Structure of Earnings Survey (SES) for Poland.

Key words: gender wage gap; sample selection; differences in distributions; decomposition of income inequalities

References:

1. Albrecht J., van Vuuren A., Vroman S. (2009): Counterfactual distributions with sample selection adjustments: Econometric theory and an application to the Netherlands, Labour Economics, Elsevier, 16(4), pp. 383-396.
2. Blinder A. (1973): Wage Discrimination: Reduced Form and Structural Estimates. Journal of Human Resources, 8, pp. 436-455.
3. Fortin N., Lemieux T., Firpo S. (2010): Decomposition methods in economics. Cambridge: NBER Working Paper, No. 16045.
4. Oaxaca R. (1973): Male-Female Wage Differentials in Urban Labor Markets. International Economic Review, 14, pp. 693-709.