The purpose of this paper is to better understand the possible reasons behind gender pay disparities, focussing on the unique features of male and female human capital and their wage returns. Despite increasing convergence of male and female human capital attainments, substantial differences remain. Extraction of human capital components non-overlapping across genders provides more profound explanation of the unexplained wage gap of men and women.
Starting with the non-parametric matching-based decomposition technique, the authors extend the pay gap estimation framework and focus on males and females having no counterpart in a set of characteristics within the opposite gender. The authors identify gender-unique human capital in terms of differences in distribution of individual characteristics across men and women and gender-specific combination of human capital characteristics. Wage returns to gender-specific profiles are evaluated applying wage regression on both full distribution of earnings and wage quantiles. The research relies on the Survey of Adult Skills (PIAAC) database for Estonia, which incorporates both formal education and cognitive skill records.
The study identifies sets of characteristics and competencies exclusive for both genders, proving that male and female profiles cannot be directly compared. The results suggest that men possess high individual and combined abilities in numeracy and problem solving in technology-rich environment, not always reached by females. This potentiates men’s higher earnings in spite of their generally lower formal educational attainments. Wage gap analysis over the full distribution of earnings shows even larger “glass ceiling” effect for females, possessing woman-specific human capital.
The authors raise a research from a novel perspective towards a role of human capital in gender wage inequality. Instead of usual reference to observable gaps in male and female characteristics, the authors identify the gender-specific human capital profiles, to a large extent non-reached by the opposite gender. Analysed associations between gender-specific characteristics and earnings provide an insight to possible effects of gender-unique human capital on a male-female wage disparity.
The support from the following projects is gratefully acknowledged: the ISCH COST ACTION IS1164 project “The EU in the new complex geography systems: models, tools and policy evaluation”; EU 7th Framework Programme project “Strategic Transitions for Youth Labour in Europe” (STYLE); the Estonian IUT20-49 project “Structural change as the factor of productivity growth in the case of catching up economies”. The authors thank Vivika Halapuu and Jaan Masso for their comments on the earlier version of the paper. The authors are also thankful for the comments received from two anonymous reviewers, as well as valuable feedback from the authors’ colleagues and project partners during several seminars and discussions.
Tverdostup, M. and Paas, T. (2017), "Gender-specific human capital: identification and quantifying its wage effects", International Journal of Manpower, Vol. 38 No. 6, pp. 854-874. https://doi.org/10.1108/IJM-05-2016-0111
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