Rexamining the gender wage gap : evidence from an online labour market experiment

Abstract

Gender wage gap have declined over the past decades with the progression of society and legal enforcement of equal wages. However, there is still existence of quite a significant gender wage gap even in developed countries. There are number of theories that have emerged regarding the psychological orientation of women that are likely to be responsible for the prevalence of gender wage. But most of these studies either focuses on the demand side in isolation that is the gender discrimination in the hiring decision of employer or supply side in isolation that is the employee productivity in terms of competitiveness and effort exertion of employees. In this paper I have investigated both the supply and demand side of the labour market through two experiments on the online labour market. The results of these two experiment shows that both male and female are responsive to wages but depending on the intrinsic motivational factor of the task they respond to wages differently. The effort exertion of women are slightly more responsive to wages again depending on the nature of the task. However on the supply side, the employer are agnostic about gender in a setting where gender discrimination would clearly hurt profitability of the employers. The two most important conclusion that can be drawn from this paper is that understanding intrinsic motivation of employees can align performance with incentives allowing both employer and employees to optimize utility. Second, the lower math score of female can be translated into higher gender wage gap because different literature have found that math related job have better pay structure. Hence, the self-selection of women into low paying jobs are at the heart of gender wage gap according to the results in this paper.