The gender wage gap and the role of reservation wages: new evidence for unemployed workers

Caliendo, Marco, Lee, Wang-Sheng and Mahlstedt, Robert 2017, The gender wage gap and the role of reservation wages: new evidence for unemployed workers, Journal of economic behavior & organization, vol. 136, pp. 161-173, doi: 10.1016/j.jebo.2017.02.011.

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Title The gender wage gap and the role of reservation wages: new evidence for unemployed workers
Author(s) Caliendo, Marco
Lee, Wang-ShengORCID iD for Lee, Wang-Sheng
Mahlstedt, Robert
Journal name Journal of economic behavior & organization
Volume number 136
Start page 161
End page 173
Total pages 13
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2017-04
ISSN 0167-2681
Keyword(s) wages
gender gap
reservation wages
Summary This paper examines the importance of differences in reservation wages for the gender wage gap. Based on two waves of rich survey data for a sample of newly unemployed individuals in Germany, we perform a decomposition analysis including measures for reservation wages, detailed information on education, socio-demographics, labor market history, as well as personality traits. In order to address the potential endogeneity of reservation wages we exploit a generated instrumental variable strategy that relies on heteroscedasticity of the error terms. Our findings indicate that the gender wage gap becomes small and statistically insignificant once we control for reservation wages. Moreover, we perform a subgroup analysis that provides valuable insights about the importance of potentially unobserved characteristics that affect reservation wages and realized wages simultaneously. Reasons for differences in reservation wages could arise from productivity differences, the fact that women anticipate discrimination and different unobserved traits or preferences.
Language eng
DOI 10.1016/j.jebo.2017.02.011
Field of Research 1402 Applied Economics
Socio Economic Objective 0 Not Applicable
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2017, Elsevier
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Document type: Journal Article
Collections: Faculty of Business and Law
Department of Economics
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