Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 1999:3: Swimming with the tide: solidarity wage policy and the gender earnings gap

Per-Anders Edin () and Katarina Richardson ()
Additional contact information
Per-Anders Edin: IFAU - Office of Labour Market Policy Evaluation, Postal: Labour Market Policy Evaluation, P O Box 513, SE-751 20 Uppsala, Sweden
Katarina Richardson: IFAU - Office of Labour Market Policy Evaluation, Postal: Labour Market Policy Evaluation, P O Box 513, SE-751 20 Uppsala, Sweden

Abstract: The purpose of this paper is to examine the role of wage compression for the gender wage gap in Sweden during the period 1968-1991. We find that the effects of changes in the wage structure on women's wages have varied over time and have had partly counteracting effects. Changes in industry wage differentials have systematically worked against women, while the changes in the returns to human capital and unobserved characteristics have contributed to reductions in the gender wage gap. Changes in the wage structure were particularly important between 1968 and 1974, when the reduction of overall wage inequality was dramatic. In 1981, however, the wage compression effect accounted only for a minor proportion of women's relative wage gains, as compared to 1974. At this time, women gained in relative wages mainly because discrimination was mitigated and/or the gender gap in unobserved skills was reduced. Between 1981 and 1991 there is a small increase in the gender wage gap. This small increase seems to have been driven by changed inter-industry wage differentials

Keywords: Gender wage gap; Wage structure

JEL-codes: J16; J31; J51

36 pages, June 23, 1999

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