Seminar: Simon Janssen, University of Zurich.

Title: What difference do beliefs make? An empirical analysis of the gender-wage gap.

Abstract:

Theories on discrimination point to a taste for discrimination, underestimation of productivity, or social norms to explain why there are income differences between women and men that are not driven by differences in productivity. However, even if the theory provided many testable hypotheses that were frequently investigated in empirical literature, there is a lack of empirical literature on the mechanisms behind the theory.

Therefore, our paper aims to directly test the impact of differences in beliefs on the gender-wage gap. A dataset is used that includes a variable that measures men’s beliefs about the expected productivity of women in their occupation. First, we find that only a small part of the variation in men’s beliefs about women’s productivity is explainable by differences in the respective job characteristics. Since we use a very rich set of job characteristics, this indicates that beliefs may be in large part independent of reality. At the same time, we also observe that social factors of the respondent such as age, education, and martial status have a significant influence on his beliefs, which points out that beliefs are indeed affected by social norms or personal backgrounds. Second, we find that wage differentials between men and women are larger in occupations in which men believe women are less productive. Even after controlling for a large set of job and work characteristics, negative beliefs about women’s productivity have a significant influence on women’s wages. Thus, we conclude that subjective beliefs play a central role in explaining discrimination in the labor market.