Decomposition of the gender wage gap in Portugal, 1998–2007: The evidence of gender discrimination

Abstract

The purpose of this article is to analyse the gender wage gap in Portugal by applyingthe counterfactual decomposition method employed by Machado and Mata (2005).In order to obtain a measure for wage discrimination at different quantiles, wagefunction estimation is based on quantile regression analysis (Koenker and Basset 1978), using datasets from the Inquérito ao Emprego (IELFS – Portuguese LabourForce Survey) of 1998 and 2007. The decomposition of gender wage inequalityshows potential wage discrimination by gender due to the differences in the returnsof working men’s and women’s characteristics. This discrimination increases acrossthe whole distribution, for both 1998 and 2007. Although differences in the workingmen’s and women’s characteristics declined, the results show empirical evidence ofthe persistence of the discrimination effect in 2007 – at the same level. In addition, Oaxaca-Blinder’s standard decomposition approach, developed in 1973, was applied.The results confirm the average gender wage gap does not reflect the reality observedthroughout the wage distribution, inasmuch as it overestimates what happens in lower-level quantiles and underestimates those of the higher levels.