Do efficient firms discriminate less? A closer look at the gender wage discrimination

Details

Supervisors

Vandenberghe, Vincent

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale

Abstract

The core idea at the centre of this paper is: gender inequality. It represents the idea that men and women are not equal in all things. As an economist, I have focused on the economic side of gender discrimination. More precisely, my thesis concentrates on the concept of gender wage gap. This is why I have investigated the nexus by which discrimination may or may not be exacerbated by the nature of firm’s efficiency. This is to my knowledge something that has never been tried before. Broadly, the gender wage gap can be defined as the difference in pay between men and women. However, it does not suffice that men and women are paid differently to claim that there is a gender gap. Thus, in economics, it is important to show that for equal labour services provided by equally productive workers, there remains a statistically significant difference in wages. I also went a step further by trying to assess whether a link between firm’s efficiency and gender wage gap exists as well as how important it is. It would indeed seem plausible that efficient firms consider women for what they are really worth, causing them to reciprocate. This question is also at the core of this paper, as I believe that efficient firms tend to discriminate women less while making more profits. This is one indication that discrimination occurs on the labour market and that firms that discriminate less are more efficient. The idea of efficient wage in that sense can be the explanation of why such firms would be more efficient. The evidence I found is in favour of the efficiency wage theory. Indeed the results show that efficient firms discriminate less, while less efficient ones discriminate more women. In my preferred estimation, the gender wage gap found in the most efficient decile of firms is of around 0,08% (and is in favour of women!), while it is of 23% in disfavour of women for the least efficient ones. This means that compared to men, women earns 0,08% less or 23% less depending on the position of their firms in the distribution of efficiency. That and the fact that more efficient firms are making more profits per workers, this would suggest that paying women more accordingly to their productivity has a positive effect on the profits the firms are making, all other things being equal. Moreover the positive coefficient associated with the share of female workers is consistent with previous results in the literature dealing with discrimination in disfavour of women.