Is my wage fair? Validating fairness perceptions among women and men

This paper examines gender differences in perceptions of the fairness of one's own pay. Theoretically, we draw on two so far separate strands of literature, on women's alleged greater tolerance for lower wages ("contented female worker paradox"), and on perceived discrimination among ethnic minorities ("integration paradox"). Empirically, we depart from previous studies by not simply assessing whether women are as likely as men to perceive their pay as unfair. Instead, we use an innovative methodology based on linked employer-employee data from about 500 German firms. This makes it possible to validate subjective perceptions of (un)fair pay by comparing them to the actual (un)fairness of someone's pay. The latter is measured as the difference between one's own pay and the predicted pay of comparable others with the same individual, job, and firm-related characteristics. Overall, women are as likely as men to perceive a fair wage as unfair - or an unfair wage as fair. However, university-educated women are somewhat less likely than men to perceive their pay as fair when they earn less than comparable employees. They might be more aware of the societal debate about gender discrimination and "aim higher" in setting their aspirations for appropriate rewards for their skills.