Generalized measures of wage differentials

This paper considers measures of wage differentials not solely determined by mean comparisons but summarizing differences across complete wage distributions. The approach builds on considerations of risk or inequality aversion and on standard expected utility concepts. In an application to the gender pay gap in Luxembourg the disadvantage of women persists according to the proposed measures: lower mean wages for women are not compensated by differences in higher moments of wage distributions (e.g., by less dispersion) at least for realistic assumptions about women preferences toward risk and inequality. The paper also illustrates an original empirical model for wage distributions in the presence of covariates and under endogenous labour market participation. Copyright Springer-Verlag 2013