Pay Inequality Between the Two Genders

This thesis consists of three chapters that investigate the influence of wage differentials between the two genders on economic growth.

In the first chapter, we explain how we used the generalized method of moments (GMM) analysis technique to estimate the relationship between the gender wage gap and economic performance for an unbalanced panel data for both OECD and European countries during the period 1980-2015. The results show that an increase of 1% in wage inequality between the two genders leads to a 0.002% decrease in the economic growth rate per capita in the case of OECD countries and a 0.003% decrease in the case of European countries. The relationship is statistically significant at 5% and 10% for each of the country groups respectively, which is consistent with previous studies.

In the second chapter, we show how we tried to address the institutional changes that might have an important impact on women's access to education, property, land, employment and so forth, which in turn influence gender wage inequality. We used the two-stage least squares (2SLS) analysis technique to estimate the relationship between the gender wage gap and economic performance. To control for potential endogeneity in the model, we instrumented the gender wage gap using data on legal restrictions on women. We took the restrictions on women into account in the analysis because they shape social and economic opportunities for males and females and affect females' independence in taking decisions. As the data on legal restrictions on women include many variables, this study used principal components analysis (PCA) to transform a large set of possibly correlated variables into a smaller set of uncorrelated variables. The results show that there was no significant difference between the gender wage gap and gross domestic product (GDP) per capita in the developing countries, which can be attributed to institutional changes deficiencies, and which contradicts the existing literature.

In the third chapter, we describe how we tried to move beyond the characteristics of individuals and consider the importance of firms or workplaces in explaining the wage differentials between the two genders. We used descriptive analysis techniques to analyse gender wage gap movement, according to firms' characteristics such as profitability, productivity and age. In addition, we strived to determine the source of the gender wage gap in economic sectors by using cross-sectional data for UK firms of 250 employees and more for the year 2017. Also, the study used the probit analysis technique to investigate how UK firms' characteristics affect firm's compliance with the government regulation which requires employers of 250 employees or more to publish their gender wage gap data. The results show that the average gender pay gap in such firms was less than the national gender wage gap in UK firms, which means that the gender pay gap in small firms was higher than in large firms. Moreover, the results show that most of the gap between the two genders comes from within firms in all sectors. Furthermore, we found that the wage gap between the two genders increases with firms' increasing profitability, productivity and age. In addition, the results indicate that females are less likely to work for the most productive firms. Also, women are still under-represented in senior positions in UK firms, while the proportion of females in senior jobs is inversely related to firms' productivity. Finally, we found that with higher age and firm's liquidity ratio, the firms will be more likely to comply with the government regulation which requires employers of 250 employees or more to publish their gender wage gap data. In addition, the results showed that with increasing profits and firms' productivity, the firms will be less likely to publish the gender wage gap data.