Gender Wage Gap when Women are Highly Inactive: Evidence from Repeated Imputations with Macedonian Data

Abstract

The objective of this research is to understand if large gender employment and participation gaps in Macedonia can shed some light on the gender wage gap. A large contingent of inactive women in Macedonia including long-term unemployed due to the transition process, female remittance receivers from the male migrant, unpaid family workers in agriculture and so on, is outside employment, but is not necessarily having the worst labour-market characteristics. In addition, both gender wage gap and participation gap enlarge as education decreases, revealing the importance of non-random selection of women into employment. Though, the standard Heckman-type correction of the selectivity bias suggests that non-random selection exists, but the resulting wage gap remains at the same level even when selection has been considered. Instead, we perform repeated wage imputations for those not in work, by simply making assumptions on the position of the imputed wage observation with respect to the median. Then, we assess the impact of selection into employment by comparing estimated wage gaps on the base sample versus on an imputed sample. The main result is that selection explains most of the gender wage gap in the primary-education group (75%), followed by the secondary-education group (55%). In the tertiary group, the small initial gap vanishes once selection considered. This suggests that indeed non-working women are not those with the worst labour-market characteristics. Results suggest that gender wage discrimination in Macedonia is actually between 5.4% and 9.8% and does not exist for the highly-educated women. The inability of the Heckman-type correction to document a role for selection in explaining the gender wage gap may be due to the criticisms to the exclusion restrictions and the large amount of missing wages.

Does motherhood explain lower wages for women in Macedonia?

“…Table 2 also supports our discussion: having a child likely makes a difference-mothers are lower paid than childless women and also compared to men (both with or without children). If looking at the unadjusted gaps pattern may suggest a role for motherhood in explaining (part of) the gender wage gap in Macedonia, then we may be able to further explain the adjusted gap seen in Petreski et al (2014). Figures 1 and 2 cross-analyse the gender and motherhood wage gaps, respectively, with the gender/motherhood employment and participation gaps for childbearing-age persons at different levels of education.…”

“…A recent study (Petreski, Mojsoska-Blazevski, & Petreski, 2014) has shown that the gender wage gap in Macedonia-when workers' characteristics and selectivity bias into employment have been taken into account-is ~ 7.5%. This suggests that 7.5% lower wage for women than men, on average, remains unexplained and could be understood as discrimination against women in the labour market.…”

Labor-Market Scars When Youth Unemployment is Extremely High: Evidence from Macedonia

“…Length of seeking a job before the current one (now employed) Females are more exposed to low wages (at the left-hand side of the wage distribution, resulting in a negative gender wage gap; see Petreski et al 2014), albeit the peak of their wage distribution is similar to that of males (Figure 6,left). Though, females are also slightly more represented at the high-wage end/tale.…”

“…However, it has been exposed to some criticism (see, e.g. Petreski et al 2014). The first line of criticism is related to the exclusion restrictions, i.e.…”

“…Olivetti and Petrongolo, 2008;Petreski et al 2014), it is the first attempt to utilize its advantages in the analysis of youth wages. Finally, in country with severe youth unemployment rates, the paper would benefit policymakers in devising active labor market programs specifically designed for youth, including but not limited to internships, traineeships, subsidies, programs of quick start, career counselling and guidance and the like.…”