Getting what (employers think) you’re worth: Evidence on the gender gap in entry wages among university graduates

Julia Bredtmann (Department of Economics, Ruhr University Bochum, Bochum, Germany)
Sebastian Otten (Department of Economics, Ruhr University Bochum, Bochum, Germany)

International Journal of Manpower

ISSN: 0143-7720

Publication date: 27 May 2014

Abstract

Purpose

The purpose of this paper is to provide empirical evidence on the gender wage differential of labor market entrants and the determinants of their starting wages.

Design/methodology/approach

The paper makes use of a unique data set on graduates in economics from a large German university that contains detailed information on the graduates’ course of study, their additional qualifications and their transition from university to the labor market. Based on these data, Mincer-type earnings functions as well as wage decompositions as proposed by Blinder (1973) and Oaxaca (1973) are performed.

Findings

The paper finds a significant gender wage differential of 7 percent. Blinder-Oaxaca decompositions suggest that the major part of this gap remains unexplained by gender differences in observable characteristics.

Research limitations/implications

The main feature of our analysis – having a highly homogeneous sample of graduates from a single university – comes at the costs of reduced ability to draw generalized conclusions from our findings.

Originality/value

This paper investigates the determinants of entry wages for a homogeneous group of high-skilled workers using a unique data set of graduates in business and economics from a large German university. Concentrating on a highly homogeneous sample limits the problem of unobserved heterogeneity, which results in an overestimation of the unexplained component of standard decompositions analyses. Hence, the finding that a large part of the gender pay gap remains unexplained can be considered as an indicator for gender discrimination in the labor market for economics graduates.

Keywords

Acknowledgements

JEL Classifications — J16, J31, J71

The authors are grateful to Thomas K. Bauer, Katja Görlitz, Katharina Lindenbaum, two anonymous referees, and participants at seminars at RWI for helpful comments and suggestions. We also thank Manfred Lösch and the team of the Chair of Quantitative Analysis at the Ruhr University Bochum for providing the data. Sebastian Otten gratefully acknowledges financial support from the German Science Foundation (DFG) through the program SPP 1169 “Flexibility in Heterogeneous Labor Markets.”

Citation

Bredtmann, J. and Otten, S. (2014), "Getting what (employers think) you’re worth: Evidence on the gender gap in entry wages among university graduates", International Journal of Manpower, Vol. 35 No. 3, pp. 291-305. https://doi.org/10.1108/IJM-01-2012-0013

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Publisher

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Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

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