Gender Wage Gaps Reconsidered: A Structural Approach Using Matched Employer-Employee Data

In this paper, we study the extent to which wage differentials between men and women can be explained by differences in productivity, disparities in friction patterns, segregation, and wage discrimination. For this purpose, we propose an equilibrium search model that features rent-splitting, on-the-job search, and two-sided heterogeneity in productivity. The model is estimated using German matched employer-employee data. Overall, the results reveal that female workers are less productive and more mobile than males. In addition, female workers have on average slightly lower bargaining power than their male counterparts.