Gender pay gaps in the young adult labor force: prejudice-based discrimination or misreading of the observed-to-offered wage relationship?

Abstract

We examine the plausibility of using prejudice-based discrimination to explain the wage differences among young men and women in eleven European countries. Utilizing a sample of over 20,000 individuals and estimating a series of country-specific regression models that adjust for ability and selection bias, we find evidence that leads to a good possibility of prejudice-based discrimination in Greece, Italy, Spain, Czechia, Hungary, and the UK. In the UK, this possibility of discrimination is mitigated to an extent by gender differences in credentials. In Austria, Germany, Denmark, and Switzerland, we find no evidence for prejudice-based discrimination. Oaxaca decompositions reveal that if women’s own human capital characteristics were rewarded at the same level as men’s in the former (six) countries, they would expect a wage gain.

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