WHAT CAUSES THE GENDER WAGE GAP IN LATVIA?

Gender wage gap raises concerns of possible discrimination in the labour market, therefore it is highly discussed topic not only in Latvia, but also in the European Union. We use anonymised micro data from Labour Force Survey to measure the gender wage gap in Latvia and identify the factors behind it. Our results imply that gender wage gap decreased during the economic crisis and increased afterwards thus exhibiting procyclical behaviour. In 2007 men on average earned around 25% more than women. In 2009 the difference shrank to 10% and then rose again to 14% in 2014. Oaxaca-Ransom decomposition results reveal that on average around one fourth of the observed gender wage gap is explained by differences in characteristics while the rest remains unexplained. The most important factor in explaining the gender wage gap is the segregation by sectors, which is partly offset with higher education levels for women (albeit segregation by fields of education is significantly in favour of men). Gender segregation by occupational groups worked in favour of men before the economic crisis but afterwards this factor ceased to be important. Our results imply that with equal characteristics as well as distributions by sectors, occupational groups and fields of education, men would earn approximately 10% more than women. Furthermore, we show that the observed gender wage gap is statistically significant in all deciles of wage distribution. Moreover, gender wage gap seems to be increasing with wage.