Labor Market Segmentation and the Gender Wage Gap in Spain

Abstract

Purpose: The purpose of this study is to analyse the gender wage gap (GWG) in Spain adopting a labour market segmentation approach. Once we obtain the different labour segments (or idiosyncratic labour markets), we are able to decompose the GWG into its observed and unobserved heterogeneity components. Design/methodology/approach: We use the data from the Continuous Sample of Working Lives for the year 2021 (matched employer–employee [EE] data). Contingency tables and clustering techniques are applied to employment data to identify idiosyncratic labour markets where men and/or women of different ages tend to match/associate with different sectors of activity and occupation groups. Once this “heatmap” of labour associations is known, we can analyse its hottest areas (the idiosyncratic labour markets) from the perspective of wage discrimination by gender (Oaxaca-Blinder model). Findings: In Spain, in general, men are paid more than women, and this is not always justified by their respective attributes. Among our results, the fact stands out that women tend to move to those idiosyncratic markets (biclusters) where the GWG (in favour of men) is smaller. Research limitations/implications: It has not been possible to obtain remuneration data by jobplacement, but an annual EE relationship is used. Future research should attempt to analyse the GWG across the wage distribution in the different idiosyncratic markets. Practical implications: Our combination of methodologies can be adapted to other economies and variables and provides detailed information on the labour-matching process and gender wage discrimination in segmented labour markets. Social implications: Our contribution is very important for labour market policies, trying to reduce unfair inequalities. Originality/value: The study of the GWG from a novel labour segmentation perspective can be interesting for other researchers, institutions and policy makers.