Sex, Wages, and Productivity: An Empirical Analysis of Israeli Firm‐Level Data

Abstract

Sex discrimination in labor markets may generate a wage gap between men and women that exceeds any gap in marginal productivity. We test for this type of discrimination using unique firm‐level data on manufacturing firms in Israel. There is a statistically significant negative association between wages and the proportion of a firm's workforce that is female. However, there is also a statistically significant negative association between marginal productivity and the proportion of females. The difference beween the wage and productivity gaps is small relative to wage‐regression estimates of wage discrimination, and is not statistically significant, which is most consistent with no discrimination.