Wage discrimination by gender in EuropeIs there any regional pattern?

Laburpena

This paper analyses wage gap determinants by gender in Europe. The existence of a gender wage gap in Europe has been widely confirmed, in spite of the fact that almost every country has adopted numerous anti-discrimination regulations since the 60s-70s. Latest Eurostat data show that the unadjusted gender wage gap (defined as the difference between average gross hourly earnings of male and female employees as percentage of male gross earnings) was at an average of 16.2 % for the 28 UE countries in 2016. For a long time, a significant percentage of this gender wage gap was explained by the low provision of female human capital and the performing of less disadvantageous jobs (less risky, less physical fitness). Both factors contributed to generate a compensatory wage gap in favour of men. However, during the last years, women have improved in almost all educational and working areas. It is quite common in most European countries to find more women than men at University, women are more integrated in almost all professions, and they are increasingly more involved the politics and firm management. Nevertheless, wage gaps seem to remain. This research is meant to provide some extra evidence in this respect by using recent European working information, specifically, the European Working Conditions Survey, 2015 (EWCS-2015). Based on this information, the Oaxaca-Blinder method will be used to decompose the average wage gap and calculate the discriminatory component (the one that is not explained by economic factors) of such gap. At the same time, given that the survey almost covers the whole European territory (both EU members and non-members), we will try to find out if there is any regional pattern related to the intensity of such discrimination. The EWCS-2015 has been carried out by the European Foundation for the Improvement of Living and Working Conditions. The survey provides information about a great variety of personal, family and working characteristics of 43,858 people from 35 European countries who are mostly employed. Non-wage earners and those who do not provide any information related to the variables used in estimation have been eliminated, thus reducing the survey to a number of observations that do not allow for estimating individual wage equations for each country successfully. Instead, we have decided to group observations into four major European regions with homogeneous economic characteristics. The regions are: North, South, East, and Central Europe. This geographical division of the sample is necessary because although the majority of these countries belong to the European Union and even most of them share a common currency (Euro), they still remarkably differ in terms history, cultural environment, the role of women and the labour relation framework. For example, Southern countries are historically characterized by a lower participation of women in the labour market and have undergone the recent financial crisis more intensively, thus causing much higher wage adjustments than in the rest of countries. On the other hand, the Eastern group, made up of countries which still had a planned economy during the 80s and 90s, are characterized by a traditionally higher participation of women in the labour market and also by counting on obsolete economic sectors and low wages. As far as the Northern countries are concerned, Scandinavia is currently the most balanced labour system from a gender perspective. Finally, the last block, named Central Europe, constitutes the core of the European Union and counts on the most competitive industrial sector. It turns vital to process wage information as homogeneous as possible, when gathering data of people from different countries, with different living standards or different currencies. So, nominal wages in Euros have been deflated using a cost of living index estimated by Eurostat, named “Comparative price levels of final consumption by private households including indirect taxes”, for wage data to represent an equivalent purchasing power for all European countries. Once wage equation estimates by gender have been carried out together with the Oaxaca-Blinder decomposition, the main conclusions reached are as follows. First of all, the effects of the human capital (education and experience) on wages are very relevant for both genders and are as expected. At this point, it can be highlighted that the impact of each education level on wages as compared to the reference category (primary studies) is generally slightly higher in case of men. Secondly, many job characteristics that reflect their advantages or disadvantages are not compensated by a wage difference, as it is stated in the theory of equalizing differences. It seems that the functioning of the European labour market is not competitive in general terms, and there are still some barriers to mobility and information. In this sense, we may highlight the fact that the presence of trade unions or works councils contributes to significatively increase wages in almost every country. In the third case, regardless the chosen coefficient structure, the Oaxaca-Blinder decomposition allows detecting the existence of very significant discriminatory wage differences by gender, while being of different magnitude according to the region. The greatest discriminatory difference is found in the group of Eastern countries (16.3 %), followed by Southern countries (13.8 %), Northern (10.8 %) and Central (8.7 %). Besides, in Northern, Eastern and Central European countries, such discriminatory difference is even higher than the estimated average wage gap. The reason for such is that female productive characteristics are currently “better” than those of men, so that the difference in favour of women in relation to those characteristics contributes to extending discrimination. Finally, after analysing the main variables that explain the discrimination coefficient, it is observed that family situation (having children and living with a couple) is the most recurrent one. That is, family obligations continue contributing to damaging women status at companies (in terms of level of involvement in working activities, possibility of promotion and wages) in spite of advances in education and occupational segregation. For this reason, it is still essential to implement European policies to promote an equal behaviour of both genders within the family environment, thus trying to avoid that women are always the ones that limit their labour objectives due to family constrains.