Gender differences in the labour market : explaining the gender wage gap : empirical evidence from Norway

Abstract

This master´s thesis aims to investigate potential sources of the gender wage gap using Norwegian register data on the full population. First, I seek to understand to what extent traditional human capital factors and other work-related characteristics contribute to the gender wage gap. Using a traditional Oaxaca-Blinder decomposition method, I decompose the male-female differentials from a cross-sectional perspective based on the study by Blau and Kahn (2017). Second, I attempt to understand whether gender inequality is due to children and if there is a motherhood penalty in earnings by adopting the event study approach suggested by Kleven, Landais, and Søgaard (2018). By controlling for maternal age and calendar year, the event study allows for capturing the effect of children on female and male wages over time. The O-B decomposition reveals that conventional human capital factors in aggregate decrease the gender wage gap, while gender segregation in industries increases the gender wage gap by a small share. As a result, most of the gender wage gap is due to unexplained factors, which calls for a discussion for other potential explanations of the gender wage gap. The event study reveals a significant child penalty in earnings for mothers, implying that children have significant impacts on wages. This motherhood penalty suggests negative selection into work and labour market adjustments around the childbirth. Whether the drop in female wages is due to unprofitable choices or discrimination is hard to establish, but it might be that both of them play a role to some degree.