What drives the gender wage gap? A look at the role of firm and job-title heterogeneity

We investigate the mechanisms that shape the gender wage gap in Portugal and provide a clear measure of the impact of the allocation of workers to firms and jobs. We find that one-fifth of the gender gap results from the segregation of workers across firms, and another one-fifth results from job segregation. We also conclude that the 'glass ceiling effect' operates mainly through worker allocation to firms rather than occupations. Our results are based on the application of Gelbach's decomposition method to the conditional wage gap obtained froma wage equation with high-dimensional fixed effects. This approach may prove to be equally useful in applications to other problems in economics.