Gender wage gap in Serbia: Inheritance and sources of the wage gap

In: Stanovništvo: Population = Naselenie, Band 59, Heft 2, S. 123-141

Abstract

The aim of this paper is to determine the size, structure, and significance
of the differences in wages between men and women during the early
transition in Serbia in the 2000s. During that period, a new legislative
framework was established in the field of labour relations, which enabled
greater liberalisation in the labour market and resulted in a reduction in
the activity rate, especially of women. Following the experiences of other
post-transition countries, it may be expected that economic and social
changes caused by the transitional shocks may stimulate different behaviours
in the labour market of both the employers, through their impact on
determination of wages, and the labour force, through workers? choice to
remain or to permanently exit the labour market. This could affect not only
the deepening of gender differences, but also the emergence of
discrimination in wage setting. The paper applies the parametric sample
selection model, on the basis of which the probability of women?s
participation in the labour market is estimated, as well as the wage
functions of men and women. Data from the Living Standards Measurement
Survey for 2002 and 2007 are used. Theoretically expected results are
obtained; children and marital status with a negative sign, and sources of
non-working income with a positive sign influence the probability of women?s
participation in the labour force. The estimated equations of wages of men
and women indicate differences in the structure of wages, which provides the
basis for the application of the statistical procedure for the decomposition
of the gender wage gap. Examination of the initial hypothesis revealed the
presence of a significant gender wage gap, which was the largest in 2002
(10.96%), falling to 5.97% in 2007. The gender wage gap in Serbia cannot be
explained by the differences in the observed characteristics of men and
women, since they act in the direction of reducing the overall gap and their
effect is stable, amounting to between -5.51% (2002) and -5.43% (2007).
Therefore, the decline in the gender wage gap is the result of reducing the
gap in the unexplained part from 17.43% (2002) to 12.06% (2007). Over the
observed period, the unexplained part of the gender wage gap remains
persistent and leaves room for consideration of the potential effects of
discrimination and possible directions of public policy.