The evolution of the gender wage gap

Abstract

In this paper we investigate when the male-female wage differential arises: Does it evolve over the early career or does it exist right from entry into first employment? For the analysis we use new administrative longitudinal data for Germany. Models with within firm job rationing or equilibrium matching show that from entry into the first job onwards women will be paid less than men. The main reason is that due to higher quit rates of women, firms are less willing to invest in firm specific training for women. In this paper we document empirically that these models can explain a substantial portion of the gender wage differentials among young skilled workers in Germany.