Essays on the Gender Wage Gap in Finland

Napari Sami

This dissertation is an empirical study of the gender wage gap in Finland. Much of the dissertation focuses explicitly on the early career as it is found that the first years after labour market entry are of great importance with respect to the overall gender wage gap. The dissertation consists of three essays.

The first essay explores the early-career gender wage gap in the Finnish private sector. I find that the gender wage gap increases significantly during the first ten years after labour market entry accounting for most of the life-time increase in the gender wage gap. The more detailed analysis of the factors contributing to the early-career gender wage focuses on university graduates. This mitigates the problems caused by the most disturbing shortcoming of the data, namely the lack of information on working hours and part-time status. In Finland, part-time rates among university graduates are very low as well as the gender difference in these rates. I consider several explanations for the gender wage gap based on the human capital theory, job mobility and labour market segregation. The results suggest that about 20 to 26 per cent of the average early-career gender wage gap is explained by gender differences in qualifications considered. Of the investigated factors gender differences in the field of education and work experience matter most.

In the second essay, I investigate in more detail the role of university majors in explaining the gender wage gap. Using data from the Confederation of Finnish Industries, significant gender differences in majors among white-collar workers are found. These differences in education account for about 38 per cent of the gender wage gap among young white-collar workers with a bachelor-level degree after controlling for age, year, gender, region, industry and firm size. The corresponding number for young white-collar workers with a master-level degree is roughly 31 per cent. There are no considerable differences in the effects of majors between new entrants and white-collar workers having more work experience. Furthermore, similarity of the results between OLS and panel methods controlling for unobserved individual factors implies that the effect of university majors is unlikely to reflect unobserved heterogeneity. Finally, women’s gains from equalizing educational distributions do not depend on the price structures used.

Using data from the Finnish manufacturing sector, the last essay studies the factors contributing to the gender gap in early-career wage growth. The analysis shows that the size of the gender gap in wage growth varies with mobility status, the gap being much higher when changing employers compared to within-firm wage growth. Several explanations for the gender gap in wage growth based on human capital theory and theory of compensating wage differentials are considered. However, much of the gap in wage growth remains unexplained. Further analysis documents that the female penalty in wage growth increases significantly as we move along the conditional wage growth distribution with a sharp acceleration in the gap at the top of the distribution.

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gender wage gap, wage growth, early career, mobility, type of education
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