Equal Pay Laws and the Gender Pay Gap: Evidence from Swedish Administrative Data

• In Event: Advancing Economic Justice: Employment and Safety Net Approaches

Abstract

Gender-based equal pay laws aim to reduce wage disparities between men and women, yet evidence of their effectiveness remains mixed. We provide new evidence on the effects of equal pay laws, using administrative data from Sweden. Results from difference-in-difference models indicate that the introduction of equal pay legislation in Sweden resulted in a 1.2 log point increase in within-job womens wages, relative to mens. Additional results provide clear evidence that this change in relative annual earnings was not driven by pre-existing trends, cannot be explained by changes in intensive labor supply, and cannot be explained by other policies passed around the same time. Our rich data allow us to explore several potential mechanisms, which to date have been overlooked in the literature. We demonstrate the role of occupational segregation, the important role of labor mobility, that the policy facilitated entrance into male dominated jobs (which are on average paid higher wages), and that effects are substantial at labor market entry, and across the career. Together, our findings provide clear evidence that equal pay legislation led to a substantial reduction in the relative wage gap between women and men. Further, our findings provide suggestive evidence of long-run effects, given the substantial reduction in the wage gap at labor market entry.

Author

• Samuel J Mann, RAND Corporation
  Presenting Author