Educational expansion, sex segregation and the initial occupational placement of women and men - changes in gender specific entry wages in Germany 1980-2003
Education and Employment over the Life Course Institute for Employment Research (IAB) Germany, http://www.iab.de
In Germany, the system of vocational training and higher education is characterized by persistent sex segregation. Due to the high acceptance of formal vocational certificates it is transmitted stronger into the labour market than in other countries. Research has shown that segregation has a strong negative effect on women´s initial occupational placement, in particular on their earnings. However, these disadvantages may be disappearing increasingly due to recent structural changes: Like in many industrialized countries, one of the ongoing effects of educational expansion has been the enormous rise in the educational attainment of women. This trend was accompanied by structural changes in the labour market, namely occupational upgrading to highly qualified knowledge intense jobs and occupations in the "female dominated" tertiary sector.
To assess the extent of stability and change in gender inequality at the time of first labour market entry, this paper analyzes the trend in the gender wage gap between consecutive cohorts of West German employment entrants for the years from 1980 until 2003. The analyses of the effects of gender, educational attainment, and occupational segregation on the gender wage gap are based on process-produced data from the IAB employment sample (IABS). This unique database includes exactly dated employment histories of a two percent sample of all employees covered by social security in Germany in the years from 1997 until 2004. To estimate the trend in the gender entry wage gap and its effects single-year OLS regressions and different wage decomposition methods are used.
The results show that the gender wage gap in employment entry has indeed sharply declined in the observation period. For the years 1999 and later it is completely explained by the controlled factors. In part, this trend is due to the improved educational attainment of women. Occupational segregation is far less relevant in explaining wage inequalities than expected, in particular for the period since the 1990s. However, the most important factor in explaining the diminishing gender wage gap is a reduction of unobserved differences between men and women and/or discrimination.