The Role of Firms in the Gender Wage Gap in Germany

This review contributes to a better understanding of the gender wage gap in Germany and puts forward key elements of a policy package to reduce gender pay gaps. It provides a detailed analysis of the role of firms in the gender wage gap by focusing on the pay gap between similarly skilled men and women between and within firms. The within-firm component captures differences in pay between men and women within firms related to differences in tasks and responsibilities, or differences in pay for work of equal value (e.g. bargaining, discrimination). The between-firm component captures the role of differences in pay between firms (unrelated to workforce composition) due to the tendency of women to work in low-wage firms. The review analyses gender differences in job mobility and the earnings consequences of career breaks following childbirth to shed light on the evolution of the gender wage gap across the working life. To put results for Germany in context, they are systematically benchmarked to those of four nearby countries (i.e. Denmark, France, the Netherlands and Sweden). The policy discussion extends the empirical analysis by putting forward a comprehensive policy package with an emphasis on policies targeted at firms.