Comparing the gender gap in gross and base wages

Abstract

Purpose The purpose of this paper is to examine the gender wage gap not only in gross wages, but also focussing on a specific salary component, the base wage, which is determined by collective bargaining for each occupational category. Design/methodology/approach The authors estimate a wage frontier to analyze the difference between workers’ observed wages and their potential wage, given human capital endowments, as well as firm characteristics. Next, the authors examine the distance to the frontier as a function of workers’ gender, in order to test whether women fail to achieve potential wages to any great extent. To do so, the authors use data from the 2010 Spanish Structure of Earnings Survey. Findings While men nearly achieve their potential base wage, females are systematically and significantly below the wage frontier (93 per cent on average). In other words, even when the authors limit the analysis to the base wage, the authors still find a significant wage differential between men and women. A detailed analysis of this result points to the existence of occupational segregation in the labour market. Within each occupational category, females tend to be concentrated in the lower ranking jobs, which entail lower wages. This result is consistent with the existence of a sticky floors phenomenon. Originality/value The authors contribute to the literature on gender discrimination that focusses on specific wage components. As far as the authors know, to date this is the first analysis to focus on a component that responds more to the characteristics of the job rather than to those of the worker.