Drivers behind the diverging gender patterns of wage inequality

This paper examines wage inequality in Spain across the economic cycle of 2006–2018. Employing the Firpo, Fortin, and Lemieux decomposition method, we analyze how differences in worker, firm, and job characteristics impact wage inequality evolution. Drawing on data from the Spanish Wage Structure Survey, our analysis reveals a decline in wage inequality over the entire economic cycle, with a more pronounced reduction among females. However, this decrease in wage inequality cannot be attributed to changes in characteristics (composition effect), as they increased. Our analysis indicates that rewards associated with these characteristics (wage structure effect) primarily drove the reduction in wage inequality. Nonetheless, gender disparities become evident when exploring the contribution of the primary explanatory variables. We find no significant correlation between the economic cycle and the evolution of wage inequality. JEL codes J31; C21 and D63