Volume 44, Number 174,
July-September 2013
Salary Gaps in Uruguay: Gender, Segregation
and Unequal Labor Qualifications
Alma Espino*
Date received: October 30, 2012. Date accepted: February 25, 2013
Abstract

This text analyzes salary differences between genders, taking into account the effect of labor segregation and unequal labor qualifications, by estimating the equations that incorporate these explanatory variables. The results indicate that segregation is fundamental to understand the persistence of salary gaps among employees of both genders, although a substantial portion is attributable to the gender of individuals. Traditional human capital variables do not really explain the gender salary gap, while educational inequality is another contributing factor. All of this has broad implications for public policy, in order to evaluate women’s advances in breaking the gender stereotypes implied by marked economic discrimination.

Keywords: Segregation, Salary Gaps, Over-Qualification, Under-Qualification.
INTRODUCTION

Although salary differences by gender are falling in keeping with data from other countries, women still earn lower average salaries than men in the Uruguayan labor market. The neoclassical interpretation of gender salary gaps is usually based on differences in productivity, as well as discrimination, which is present when salary differences cannot be explained by economic features that affect worker productivity or by the nature of job positions.

In a broader sense, discrimination against women can be understood as part of the process through which the skills and capacities to enter the labor market are acquired, which later contribute to real or perceived differences in gender productivity. This process encompasses discrimination in education, hiring and/or promotions, which may increase the cost for a discriminated group to acquire the skills they need, where remuneration does not compensate for this higher cost. The formation of expectations in this context may further discourage individuals with determined preferences from responding to prevailing gender norms. As such, factors that decide the choice of occupation can be considered partly endogenous. Social norms (formal and informal) and expectations are especially important for feminist economists when examining the preferences of males and females in terms of education and employment. These economists may systematically underestimate the value, skills and effort required for activities labeled as “female,” in a social order where women are the subordinate gender (Johansson and Katz, 2007).

This work first aims to quantify gender labor segregation in terms of type of occupation, sectors of economic activity and company establishments. This text then analyzes the imbalances in Uruguayan workforce qualifications, as well as the link between this inequality and job segregation. Finally, we calculate the magnitude of the impact of labor segregation and imbalanced qualifications on salary gaps, by estimating equations that take into account these explanatory variables.

IMPORTANT FACTORS: LABOR SEGREGATION AND SKILL MISMATCH

Labor Segregation

Job segregation by gender – understood as the disproportionate concentration of women in relation to their participation in the workforce in certain occupations – has been described in literature as a factor that contributes to salary differences between men and women. Numerous empirical studies have sought to quantify how this segregation has evolved on the job, industry and company level, and its effect on salaries.1 For Uruguay, occupational segregation has been a persistent trend and has been empirically identified as one of the major sources of salary differences between individuals of both genders. Amarante and Espino (2004) analyzed the effect of occupational segregation on salary differences by gender in the private sector (1990-2000) and concluded that salary differences between men and women were due to the fact that female salaries were negatively affected by the concentration of women in those jobs. However, male salaries in Uruguay were not affected by low labor insertion in female positions. This work confirms the differences regarding the economic characteristics of men and women and the effect of occupational segregation, whose importance only increased in the time period studied. This further heightened salary differences, as it implies a penalty for women that work in traditionally female occupations, but not for men.

* Researcher at the Institute for Economics. Faculty of Economic and Business Sciences. Universidad de la República. Uruguay.
      E-mail: alma@iecon.ccee.edu.uy


1 Among others, see Bergman (1974), Polacheck (1979), Blau (1984), Johnson and Solon (1986), Cabral Vieira, Rute Cardoso, Portela (2003), Bernat Díaz (2009), Nacira María Baraza Narváez (2010).

Published in Mexico, 2012-2017 © D.R. Universidad Nacional Autónoma de México (UNAM).
PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 193, April-June 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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