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Innovation as a firm-level factor of the gender wage gap

Author

Listed:
  • Jaan Masso
  • Priit Vahter

Abstract

Purpose - This paper investigates the relationship of both technological (product and process) and non-technological (organizational and marketing) innovation with the gender wage gap at firms. Design/methodology/approach - Using employer–employee level data from Estonia, the authors estimate Mincerian wage equations, in order to show how innovation at the firm level is associated with the gender wage gap. Next, the authors use propensity score matching (PSM) to study the effects of the movement of men and women into innovative firms, how this shapes the gender wage gap at firms. Findings - The authors find that both technological and non-technological innovation are associated with a larger gender wage gap at firms. The relationship between innovation and the contemporaneous gender wage gap at firms reflects to a significant extent the different selection of men and women with different time-invariant characteristics to innovative firms. Further, the authors find that movement of men and women to work at innovative firms is in longer term associated with larger gains in wages for men. The authors also observe that the relationship of innovation with gender wage gap is stronger in the case of women with children. Originality/value - Much of the prior analysis focuses on the effects of technological innovation on gender-related labour market outcomes. The authors show here that the relationship of innovation at firms with higher gender wage gap is not only specific to technological innovation, but is more general, and is observed across different types of innovation indicators, including non-technological innovation. This study's results suggest that the effects of innovation on gender wage gap may reflect to an extent the higher demand for flexibility of employees for work purposes at innovative firms, which may increase the gender wage gap, especially between men and women with children.

Suggested Citation

  • Jaan Masso & Priit Vahter, 2023. "Innovation as a firm-level factor of the gender wage gap," International Journal of Manpower, Emerald Group Publishing Limited, vol. 45(3), pages 449-465, August.
    • Handle: RePEc:eme:ijmpps:ijm-02-2023-0083
    DOI: 10.1108/IJM-02-2023-0083
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    Cited by:

    1. Ilona Pavlenkova & Luca Alfieri & Jaan Masso, 2024. "Effects of automation on the gender pay gap: the case of Estonia," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(3), pages 584-608.
    2. Meriküll, Jaanika & Tverdostup, Maryna, 2023. "The gap that survived the transition: The gender wage gap in Estonia over three decades," Economic Systems, Elsevier, vol. 47(3).

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    More about this item

    Keywords

    Innovation; Gender wage gap; Wage inequality; J31; J71; J16; D22;
    All these keywords.

    JEL classification:

    • 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
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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