that women of this age group who do find employment are more likely to possess higher expertise and be employed as professionals or associate professionals.

Women’s salaries are lower than men’s at all education levels, except for women with PhD degrees (Table 7). The highest wage gap is observed between men and women with primary education where women earn almost a quarter less than men. However, the wage gap decreases progressively with each level of education and female master’s degree holders earn only about one percent less than men.

The differences in men’s and women’s average earnings are much higher in rural

**Table 7. Wage gap between men and women by educational level** **<u>(population age 15 and above)</u>**

|**Education Level**|**Wage**<br>**gap**|
|---|---|
|Primary education (eight years)|24.0|
|Lower secondary education lasting 1-3 years|20.0|
|Upper secondary education lasting 4-5 years|14.9|
|High education, faculty, academy or higher school|3.4|
|Master's degree|0.9|
|PhD degree|-3.4|
|Source: Serbia LFS, 2009||

than in urban locations: women in rural areas are paid 12.9% less than men while women in urban areas are paid 4.5% less than men. This may be indicative of the greater prevalence of stereotypes about men’s and women’s roles as family income providers in rural areas, so that women are paid less than men for work of equal value.

Furthermore, many rural women are working on a family business or farm without any financial remuneration at all: 18.8% of women vs. 3.9% of men in rural areas are not compensated for their work. The majority of the unpaid workers are employed in agriculture: 82.5% of men and 94.2% of women performing unpaid work. Women who work in agriculture are 4.5 times more likely to work without any financial remuneration than men.

# **3.2 Explaining the Wage Gap**

This section of the paper attempts to explain the wage gap between men and women in Serbia. The conclusions of the analysis below suggest that the relatively small gender wage gap in Serbia (smaller than in Western European economies) can be explained by the fact that female workers in Serbia on average have better characteristics (e.g. education levels) than male workers. If men had the same characteristics as women the wage differentials would have been larger. The wage gap occurs due to different returns to the same worker characteristics (e.g. education, occupation, sector of employment) and could be indicative of discrimination of women in the Serbian labor market.

# _<u>Methodology</u>_

The paper applies the Oaxaca-Blinder methodology to explain the observed wage differentials between men and women in Serbia. The approach is based on the assumption that wages are tied to productivity. In the absence of discrimination, the observed gender wage differentials would result from the differences in productivity between men and women. Gender wage discrimination takes place when equally productive workers are paid different wage rates<sup>14</sup> .

To measure wage differentials, separate wage equations are estimated for men and women: Males’ wage: Wmale = male _X +_ male (1) Females’ wage: Wfemale = female _X_ + female (2),

> 14 Gardeazabal, Javier, Arantza Ugidos. 2005. _Gender wage discrimination at quintiles._ Journal of Population Economics

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