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Gender Differences in Comparative Advantage Matches: Evidence from Linked Employer-Employee Data

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  • Hugo Sant'Anna

Abstract

In this paper, I introduce a novel decomposition method based on Gaussian mixtures and k-Means clustering, applied to a large Brazilian administrative dataset, to analyze the gender wage gap through the lens of worker-firm interactions shaped by comparative advantage. These interactions generate wage levels in logs that exceed the simple sum of worker and firm components, making them challenging for traditional linear models to capture effectively. I find that these ``complementarity effects'' account for approximately 17% of the gender wage gap. Larger firms, high human capital, STEM degrees, and managerial roles are closely related to it. For instance, among managerial occupations, the match effect goes as high as one-third of the total gap. I also find women are less likely to be employed by firms offering higher returns to both human capital and firm-specific premiums, resulting in a significantly larger firm contribution to the gender wage gap than previously estimated. Combined, these factors explain nearly half of the overall gender wage gap, suggesting the importance of understanding firm-worker matches in addressing gender-based pay disparities.

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  • Hugo Sant'Anna, 2024. "Gender Differences in Comparative Advantage Matches: Evidence from Linked Employer-Employee Data," Papers 2411.03209, arXiv.org.
  • Handle: RePEc:arx:papers:2411.03209
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    References listed on IDEAS

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    3. Elise Coudin & Sophie Maillard & Maxime Tô, 2018. "Family, Firms and the Gender Wage Gap in France," Working Papers 2018-09, Center for Research in Economics and Statistics.
    4. Stéphane Bonhomme & Thibaut Lamadon & Elena Manresa, 2019. "A Distributional Framework for Matched Employer Employee Data," Econometrica, Econometric Society, vol. 87(3), pages 699-739, May.
    5. Claudia Goldin, 2014. "A Grand Gender Convergence: Its Last Chapter," American Economic Review, American Economic Association, vol. 104(4), pages 1091-1119, April.
    6. Jan Eeckhout & Philipp Kircher, 2018. "Assortative Matching With Large Firms," Econometrica, Econometric Society, vol. 86(1), pages 85-132, January.
    7. François Gerard & Lorenzo Lagos & Edson Severnini & David Card, 2021. "Assortative Matching or Exclusionary Hiring? The Impact of Employment and Pay Policies on Racial Wage Differences in Brazil," American Economic Review, American Economic Association, vol. 111(10), pages 3418-3457, October.
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