title: Essays on gender differences in pay
Creators: name: Satlukal, Sascha
Publisher: name: Universität Hohenheim
Year: 2024
Subjects: subject: 330

description: The three empirical studies underlying this dissertation all deal with the gender difference in pay. In particular, they analyze gender differences in expectations and aspirations about wages as well as beliefs about job insecurity and job finding chances and their effect on the observed wage inequality between women and men. In the first research article I evaluate, together with Stephanie Briel, Aderonke Osikominu, Gregor Pfeifer, and Mirjam Stockburger, wage expectations of prospective university students. For this analysis, we exploit a survey among applicants at Saarland University in Germany. The survey primarily asks respondents about their expectations of their own starting salary when entering the labor market as well as about their expectations regarding the average starting salary of other students in their study field. In a first step, we estimate unexplained gender gaps at various quantiles of the conditional and unconditional distribution of respondents' expected own salary and expected average salary. Our results reveal sizable gender differences across the distributions of both expected salaries. Based on the quantile regressions, the wage expectations of females are 5 to 15 percent lower than those of males. Yet, the gender gaps are more pronounced in case of the expected own salary. Likewise, the gender gaps are larger at the lower end of the wage expectation distributions. In the next step, we decompose the raw gender gaps at unconditional quantiles and document that a substantial portion of the gaps can be attributed to the choice of the study field. In the last step, we compute two measurements of biased beliefs and study their role in explaining the gender gap in wage expectations. The first measurement compares students' perceptions of their own earning potential relative to other students in their field of study to their relative performance in high school. The second measurement confronts students' expectations about the average starting salary to observed starting salaries of university graduates. We show that biased beliefs about the relative earnings potential and average salaries together can explain a large part of the gender gap across the distribution of expected own salaries. Thus, our study contributes to the literature by highlighting that biased beliefs are major drivers of the gender gap in wage expectations. In the second research article Marina Töpfer and I analyze gender differences in reservation wages of non-employed job seekers. To do so, we use survey data from the German Socio-Economic Panel Study which asks non-employed participants about their monthly reservation wage and their intended weekly working hours. Based on the reported monthly reservation wages and intended working hours we compute the hourly reservation wage of individuals and find that women in our sample set 3 percent lower reservation wages compared to men. Next, we estimate the unexplained gender gap in reservation wages with a variety of parametric and semiparametric estimators. In addition, we use conventional as well as data-driven model specifications for the estimation. Hence, we can compare the results of different estimation approaches. All of our estimates of the unexplained gender gap suggest that women set lower reservation wages than men with similar observed characteristics. The estimates are all statistically significant and range between 5 and 8 percent. Comparing the different estimates of the unexplained gender gap we see that our estimate is relatively robust with regard to the model specifications, but is more sensitive to the choice of the estimator. Furthermore, we assess heterogeneity of the gender gap across the reservation wage distribution and with regard to characteristics such as marital status, children, and education. Our findings indicate that the gender gap in reservation wages is particularly pronounced at the top of the reservation wage distribution, among the high-skilled, and among individuals who live in a household with a child. In the third research article I investigate gender differences in beliefs about job insecurity and job finding chances and their consequences for the gender gaps in wages and reservation wages. To address this research question, I again utilize date from the German Socio-Economic Panel Study, which provides information on individuals' perceptions of their job insecurity or their chances of finding a job. Whereas employed respondents are asked how likely it is that they lose their job within the next two years, unemployed respondents are asked how likely it is that they find a job within the next two years. As the first step of my analysis, I compare these subjective beliefs to objective probabilities that I predict with machine learning methods using a large set of predictors. I find that employed individuals considerably overestimate the probability of a job loss on average, while unemployed individuals slightly overestimate the probability of finding a job. But, women are significantly more pessimistic with regard to both expectations compared to men. These gender differences in beliefs do also persist when I control for a large set of observed characteristics. Subsequently, I relate the job loss expectations to wages of employees and the job finding expectations to reservation wages of unemployed job seekers. My results suggest a negative relationship between job loss expectations and wages on the one hand, and a positive relationship between job finding expectations and reservation wages on the other hand. Finally, I estimate the effect of the gender differences in the beliefs to the gender gaps in wages and reservation wages and find a small positive contribution in both cases. But, only the contribution of job loss expectations to the gender gap in wages is statistically significant. In addition, I demonstrate that the effect of job loss expectation to wages is larger for workers without a collectively agreed wage and for college graduates.