No abstract

Purpose The purpose of this paper is to highlight the pivotal role of overeducation in explaining the unexplained part of the gender pay gap (GPG), i.e. the component usually attributed to gender discrimination in the Oaxaca-Blinder decomposition. Design/methodology/approach The study uses a large Italian data set (ISFOL PLUS 2005–2014) to estimate the GPG among properly educated and overeducated workers. The model simultaneously accounts for both participation bias and endogeneity bias by applying an extension of the Heckman’s two-stage procedure. Findings Estimates show that the GPG is significantly higher among overeducated than among properly educated workers because women’s unobservable characteristics driving female employment into overeducation also drag down female wages more than men’s unobservable characteristics drag down male wages. Correcting for the participation and overeducation decisions, the unexplained portion of the GPG disappears among overeducated workers, while it remains significant among properly educated individuals. Originality/value The authors draw the conclusion that overeducation is, first, a first-best matching for individuals (both men and women) compensating with more education for their lower productive characteristics. Second, it may be a signaling device for women spending their useless-for-the-job diploma to inform employers on their valuable though unobservable productive characteristics and fight gender wage discrimination. The results favor education as a tool of counteracting gender discrimination. Hence, as females are less overeducated than males despite their larger representation in higher education, there should not be concern that expanding higher education will disadvantage females.

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Using Italian microdata over the period 2005–2016, this paper studies the difference in pay between elderly (55–64) and adult (34–54) workers in Italy along the wage distribution. The estimation strategy consists in using a three‐way fixed effects wage model and adjusting the wage gap for (observed and unobserved) labour market heterogeneity. The estimation relies on OLS as well as on unconditional quantile regressions. The analysis beyond the mean shows substantial differences in the age pay gap along the wage distribution and finds particularly pronounced gaps at the top. The fixed effects of interest (individual, job, and industry) are estimated via a partitioned procedure. Adjusting the gap for labour market heterogeneity reduces the gap almost to zero. The results suggest that individual differences between the cohorts both observed and unobserved are the main driver of the gap.

This article investigates the effect of public-contest recruitment on earnings for men and women using Italian microdata over a time period of ten years. We find that the gender pay gap vanishes, and even reverses among young employees when they are selected through public contests. The results suggest that selection mechanisms like public contests may offer a way for merit-based and gender-fair wage-setting. However, since public contests and the public sector are highly correlated, we analyse the gender pay gap by taking into account both the connection between the public and private sector and the open contest issue. By decomposing our results by sector, we find that public contests are a necessary but not sufficient condition for meritbased and gender-fair recruitment. Similarly, the institutional environment of the public sector is a necessary but not sufficient condition for ensuring that public contests are merit-based and gender-fair screening devices. Taken together, these two factors cause the gender pay gap to disappear.