Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2021:3: Wage Inequality, Selection and the Evolution of the Gender Earnings Gap in Sweden

Ulrika Ahrsjö (), Susan Niknami () and Mårten Palme ()
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Ulrika Ahrsjö: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden
Susan Niknami: Dept. of Economics, Stockholm University, Postal: Institute for Social Research, Stockholm University, S-106 91 Stockholm, Sweden
Mårten Palme: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: We estimate the change in the gender wage gap between 1968 and 2010 in Sweden accounting for (1) changes in the intensive margin of labour supply; (2) changes in the overall wage inequality; (3) changes in selection into the labor market using parametric and non-parametric selection corrections. Our results show that between 1968 and 1991, about half of the changes in the gender wage gap can be attributed to changes in the overall wage distribution. Conversely, changes in the wage distribution in 1991-2010 masks a larger closure of the gender wage gap. Our corrections for selection into the labor force suggest that uncorrected estimates miss about half of the around 20 percentage points decrease in the gender wage gap over the 1968-2010 period.

Keywords: Gender pay gap; wage gap; gender inequality; selective samples

JEL-codes: J16; J22; J31; J51; J71

45 pages, August 25, 2021

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