Sources of gender wage gap in different economic sectors: the Israeli case

Abstract

The purpose of the article is to examine the importance of personal characteristics vs. the importance of human capital returns in explaining the existing gender wage gap in different economic sectors in Israel. Using simulations on Israeli census data for 1983 and 1995, the analysis predicts women's wages in two cases. The first case predicts a woman's wages if she had the same personal characteristics as a man, and the second case predicts a woman's wages if she had the same human capital returns. By comparing the two predicted gender wage gaps to the existing gender wage gap, we can learn about the dominant explanation for the existing gender wage gap. The results show that the gender wage gap in all economic sectors stems mainly from differences in gender returns rather than differences in gender characteristics. Moreover, in the products sector and the low-services sector, the gender wage gap would have been larger if women had the same characteristics as men.

Acknowledgements

The data set was taken from the Israel Social Science Data Center (ISDC), The Hebrew University. I would like to thank Ruth Klinov for useful comments and suggestions. I am also grateful to Gregory Yom-Din for his help with the data.