Firm Pay Policies and the Gender Earnings Gap: The Mediating Role of Marital and Family Status

Abstract

Using data from the Canadian Employer-Employee Dynamics Database between 2001 and 2015, the authors examine the impact of firms’ hiring and pay-setting policies on the gender earnings gap in Canada. Consistent with the existing literature and following Card, Cardoso, and Kline (2016), findings show that firm-specific premiums explain nearly one-quarter of the 26.8% average earnings gap between female and male workers. On average, firms’ hiring practices, due to differences in the relative proportion of women hired at high-wage firms (known as sorting), and pay-setting policies, due to differences in pay by gender within similar firms, each explain approximately one-half of this firm effect. The compositional difference between the two channels varies substantially over a worker’s life cycle, by parental and marital status, and across provinces.

The Significant Factors Influencing Individual’s Perceptions of Pay Gap

“…This article examines the most significant factor affecting people's perceptions of the gender wage gap. From the previous articles that have been reviewed (Sipe et al, 2016;Töpfer, 2020;Li et al,2023;Foote & Harmon, 2006;Khitarishvili, 2019), this paper was able to come to the conclusion that five demographic variables were able to be connected different hypotheses. These are the five hypotheses that will be brought up throughout this article:…”

The Gender Wage Gap, Between-Firm Inequality, and Devaluation: Testing a New Hypothesis in the Service Sector

“…Jewell et al (2019) find firm-level sorting accounts for three times as much of the gender pay gap as occupational sorting using employer–employee data in the United Kingdom, but after adjusting for worker characteristics this was only equal to about 6% of the unexplained gap. More recently, Li et al (2022) replicated Card et al 2016's study design using the Canadian Employer–Employee Dynamics Database and found that about a quarter of the wage gap could be explained by firm pay premiums, with nearly half of this difference attributable to firm-level sorting. While these and other studies 2 draw attention to the importance of firm-level segregation, the varied national contexts are difficult to extrapolate to the United States given the different labor market structures.…”

“…This devaluation hypothesis stands in contrast to economic accounts of firm segregation (Card et al, 2016;Li et al, 2022) in which wage differences between firms generally reflect firms' surpluses and thus exist independent of workforce gender composition. In economic accounts, women are underrepresented at the highest paying firms, and this may reflect employers' preference for male employees at the time of hire (allocative discrimination), but could also reflect women's self-selection into lower-paying firms, perhaps due to compensating differentials.…”

Impact of Covid-19 on Employment Equity: A Canadian Perspective

“…The Li et al (2023) inspected the impact of employers' recruiting and pay-setting strategies on the gender earnings gap in Canada using data from the Canadian Employer-Employee Dynamics Database between 2001 and 2015. Findings support Card, Cardoso, and Kline (2016) and the body of previous data by demonstrating that approximately onequarter of the 26.8% average earnings discrepancy between male and female workers may be attributed to firm-specific premiums.…”