Gender wage gaps persists across low-income labor markets, but the source of these gaps is not well understood. Is the gap driven by women working at lower-paying firms, or by firms paying women less from the same job? We use a combination of firm-level data and a resume rating exercise to test this question.
We find some evidence for both theories, but find that the effect appears mostly driven by between-firm differences. Without controls, we find that Nairobi women’s wages are 26% lower than men’s. Characteristics of the worker and role have a modest impact, but adding firm level fixed effects drops the gap to 7% (i.e., within a given firm, wages are 7% lower for women than men on average).
To explain the remaining within-firm, we ask firms to rate hypothetical candidates (in which we randomly vary gender and worker quality). We find that while men and women are equally likely to receive a hypothetical offer, men are on average offered 8% higher wage. We interpret this as consistent with firms differentially rewarding the quality of men relative to women.
