ABSTRACT

This paper presents a model where wage differences between men and women arise from taste-based discrimination and monopsonistic mechanisms. We show how preferences against women affect heterogeneity in firms’ pay policies in the context of an imperfect labour market, deriving a test for the presence of taste-based discrimination and of other firm-level mechanisms driving the gender wage gap, in particular compensating wage differentials. These results inform an analysis of sex pay differences in the Italian manufacturing sector showing that preferences for workplaces providing more flexible schedules are a significant determinant of the gender wage gap. Taste-based discrimination mechanisms appear to be significant as well, but small in size.

JEL codes: J00, J16, J31, J71.
Keywords: Gender Wage Gap, Taste-Based Discrimination, Monopsonistic Discrimination, Compensating Wage Differentials, Firm Wage Policy, Matched Employer-Employee Data.
ISSN 2704-7407
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