Gender and potential wage in Europe: a stochastic frontier approach

Purpose - The purpose of this paper is to provide evidence concerning wage differentials and the existence of gender pay discrimination in France, Germany, Italy, Spain and the United Kingdom. Design/methodology/approach - The authors used the stochastic frontier approach as an alternative method to measure the relevance of gender discrimination. This methodology allows them to explain the differences between the potential and the observed wage that an individual could obtain, given his or her human capital endowment. Findings - The authors found support for wage discrimination against women. The results show that a significant part of the gender wage gap in all the countries analysed is not attributable to differences in human capital endowment or personal and job-related characteristics. Research limitations/implications - The definition of education in the data set is modest and broadly defined. Originality/value - This paper contributes to the debate on gender discrimination by analysing the determinants of the gender gap using an innovative methodology in the gender gap literature: the stochastic frontier approach.