What Determines Wage Inequality Among Young German University Graduates?

Abstract

SummaryThis paper investigates the gender wage gap among university graduates in their first job and five to six years into their careers using a representative survey among German university graduates. Results from standard decomposition techniques show that up to 83%of an initial 24% earnings disadvantage for women in the first job can be attributed to differences in endowments that are fixed at the time of labor market entry. Of these, fields of study play a dominant role and explain up to 70%of the earnings differential. Adding employer characteristics raises the explained part of the differential to 96%. The importance of unexplained factors increases after five to six years where 40% of the earnings gap remain unexplained even when controlling for detailed experience and employer characteristics.