Worker Sorting and the Gender Wage Gap

Abstract

Around 15% of the gender wage gap is due to women sorting into firms that pay lower wages. Using French matched employer-employee data, I investigate whether these gender differences in sorting reflect differences in preferences or opportunities. I employ a finite mixture approach `a la Lentz, Piyapromdee, and Robin (2022) to estimate a model of wages and mobility. Using information on wages, mobility, and observed characteristics, this model classifies workers and firms into a finite number of types and classes. Moves within and between firm classes separately identify the two key channels under the assumption that workers of the same gender and type are indifferent between firms that belong to the same class. I find that gender differences in preferences account for up to 70% of the sorting component of the gender wage gap, but with considerable differences across age groups.