Analyzing wage gaps between male and female workers in Peru: a novel decomposition methodology and case study

Wage gaps between male and female workers remain a persistent challenge in labor markets worldwide, often stemming from structural inequalities and unmeasured factors beyond productivity differences. This article introduces a novel decomposition methodology to analyze wage differentials between men and women in Peru, offering an alternative to traditional approaches such as the Kitagawa-Oaxaca-Blinder model. By simulating a counterfactual scenario in which male and female workers possess identical productivity characteristics, this method isolates the unexplained component of the wage gap while accounting for regional labor dynamics. The analysis reveals that substantial wage disparities persist even when observable factors are controlled.