Gender Wage Discrimination and Poverty in the EU

This paper analyzes the role of gender wage discrimination in household poverty rates in several European Union (EU) countries using the European Community Household Panel. In order to quantify the impact of discrimination on poverty, it proposes the construction of a counterfactual distribution of wages where discrimination against women has been removed. Using this new wage distribution, the study computes total household income and compares poverty rates in the absence of discrimination to those actually observed. The results show that, in general, discrimination against women plays a determinative role in the current levels of poverty in EU countries, although results by country show that this role differs in intensity and pattern. Further, the study finds that in EU countries the effect of discrimination on poverty risk dramatically increases for individuals in households that largely depend on working women' earnings.