Econometric Assessment of the Gender Pay Gap

This paper aims to analyze the reasons that affect the unexplained part of the gender wage gap, including gender discrimination in the labor market. Most econometric studies of the gender wage gap show rather large part of the gap which is not explained by variables that reflect differences in individual characteristics. Therefore, after selecting variables for the model and conducting an econometric assessment of the gender pay gap, it is necessary to analyze the results obtained taking into account the knowledge from the theoretical base. The work includes an overview of theoretical and empirical studies on the topic of the gender pay gap. As a result, the main causes of differences in average wages between men and women are determined. In addition the main research methods are selected based on the analysis of previous works. The dependent variable is the size of the hourly wage, so it takes into account the number of hours worked, which affects the difference in monthly wages. First, the wage equations for men and women are estimated using the ordinary least squares method. Heckman’s two-step method is also used in purpose to determine the sample selection bias and eliminate it. Next, the gender pay gap is decomposed using the Oaxaca-Blinder method and the results are interpreted. The study is based on data from the 27th wave of surveys of the RLMS of the Higher School of Economics. According to the results of the study, gender asymmetry in the labor market influences the gender wage gap a lot. It may be observed in distribution by industry, vocational qualification groups, and even enterprises with state participation in management. The determinants of education increase the unexplained share of the gender gap. It indicates better performance for women against lower average wages. The results of the analysis show that the gender discrimination' influence on wage differences is more than calculated level. The main cause of it is that the gender discrimination indirectly affects the gap through the analyzed factors in addition to direct effects.