Getting What (Employers Think) You’re Worth – Evidence on the Gender Gap in Entry Wages among University Graduates

Since the early 1970s, wage differentials between men and women have attracted the research interest of labor economists. However, up to now empirical evidence on gender differentials of labor market entrants and the determinants of their starting wages is scarce. To fi ll this gap, we make use of a unique dataset on graduates in economics from a large representative German university, to investigate whether – even for such a homogeneous group of labor market entrants – a gender gap in earnings exists. Concentrating on a highly homogeneous sample limits the problem of unobserved heterogeneity, which results in an overestimation of the unexplained component of standard decompositions analyses. The results reveal that women’s entry wages are significant lower than those of their male counterparts. Blinder-Oaxaca decompositions suggest that the major part of this gap remains unexplained by gender differences in observable characteristics.