Narrowing industry wage premiums and the decline in the gender wage gap

Abstract

The gender gap in firm wage premiums is well documented, but evidence on its evolution over time and its contribution to declining gender wage gaps remains mixed. Using comprehensive employer–employee data from France, we find that 20% of the reduction in the gender hourly wage gap between 2002 and 2019 can be attributed to a decline in the between-firm component of the gender gap in firm wage premiums. However, our analysis shows that this reduction is not driven by improvements in women’s relative position in the firm wage premium ladder. We find no evidence that, conditional on workers’ skills, women have become more likely to move into higher-paying firms or industries, or that newer cohorts of women are better represented in these segments. Instead, the narrowing is primarily driven by broader changes in the distribution of firm wage premiums, specifically through a compression of industry-specific premium differentials. These findings highlight how structural changes in the economy can affect gender wage gaps even in the absence of changes in women’s relative labor market position.