Conférence dans le cadre du programme PRESAGE de Sciences Po Paris
4 juillet, OFCE, salle du rez-de-chaussée
69, quai d’Orsay 75007 Paris
This paper investigates a new way to decompose the gender wage gap with the introduction of individual risk attitudes using representative Korean data. We estimate the wage gap with correction for the selection bias, which latter results in the overestimation of this wage gap. Female workers are more risk averse. They hence prefer working in the public sector, where wages are generally lower than in the private sector. Therefore, our observation of the gender wage differential based on the normal Mincerian wage equation is overestimated. Our (corrected) wage differential is significantly reduced (by from 3% to 8% points) by applying the Switching Regression Model and Lee’s polychotomous selection correction. Self-selection based on risk attitudes therefore explains, in part, what is popularly perceived as gender discrimination.