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The Role of Firms in Gender Earnings Inequality: Evidence from the United States

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  • Isaac Sorkin

Abstract

This paper documents that in the US, men are more likely than women to work in both high-wage firms and high-wage industries. I then ask why this sorting occurs. I consider two main explanations: men and women have different preferences, and men and women have different opportunities. Through the lens of a simple random search model, I find that the dominant explanation for sorting is differences in opportunities. One implication of this result is that women are at firms that offer better nonpay characteristics, and this plays an important role in explaining the gender earnings gap.

Suggested Citation

  • Isaac Sorkin, 2017. "The Role of Firms in Gender Earnings Inequality: Evidence from the United States," American Economic Review, American Economic Association, vol. 107(5), pages 384-387, May.
    • Handle: RePEc:aea:aecrev:v:107:y:2017:i:5:p:384-87
    Note: DOI: 10.1257/aer.p20171015
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    References listed on IDEAS

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    1. Stefan Bender & Julia Lane & Kathryn Shaw & Fredrik Andersson & Till von Wachter, 2008. "The Analysis of Firms and Employees: Quantitative and Qualitative Approaches," NBER Books, National Bureau of Economic Research, Inc, number bend08-1, February.
    2. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 967-1015.
    3. Judith Hellerstein & David Neumark & Melissa McInerney, 2008. "Changes in Workplace Segregation in the United States between 1990 and 2000: Evidence from Matched Employer-Employee Data," NBER Chapters, in: The Analysis of Firms and Employees: Quantitative and Qualitative Approaches, pages 163-195, National Bureau of Economic Research, Inc.
    4. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    5. Isaac Sorkin, 2018. "Ranking Firms Using Revealed Preference," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1331-1393.
    6. David Card & Ana Rute Cardoso & Patrick Kline, 2016. "Bargaining, Sorting, and the Gender Wage Gap: Quantifying the Impact of Firms on the Relative Pay of Women," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 633-686.
    7. Stefan Bender & Julia Lane & Kathryn Shaw & Fredrik Andersson & Till von Wachter, 2008. "Introduction to "The Analysis of Firms and Employees: Quantitative and Qualitative Approaches"," NBER Chapters, in: The Analysis of Firms and Employees: Quantitative and Qualitative Approaches, pages 1-16, National Bureau of Economic Research, Inc.
    8. Bender, Stefan & Lane, Julia & Shaw, Kathryn L. & Andersson, Fredrik & von Wachter, Till (ed.), 2008. "The Analysis of Firms and Employees," National Bureau of Economic Research Books, University of Chicago Press, number 9780226042879, April.
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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