The Econometric Society - 2024 ESEM Best Paper Award
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Abstract
Part of the gender wage gap reflects women sorting into lower-paying firms over their careers. Using French matched employer-employee data, this paper examines whether gender differences in firm allocation reflect preferences or opportunities, and how these forces vary across the wage distribution. A finite-mixture model recovers latent worker types and firm classes from wages, mobility, and observables, using firm-to-firm transitions to identify job offer arrival rates and worker preferences. Sorting matters mainly at the top. Among high-wage workers, equalising women’s mobility to men’s reduces the lifecycle wage gap by 30 percent. Differences in job offers while employed contribute little, whereas preferences over firms explain more than half of the sorting effect, and re-entry after non-employment explains most of the remainder. Equalising wage growth and mobility closes 80 percent of the high-wage lifecycle gap, indicating slower wage progression for women even conditional on worker type, firm class, career stage, and occupation.