Decomposing the Gender Pay Gap in Colombia: Do Industry and Occupation Matter?

This paper aims to quantify at which extent industry and occupation characteristics explain the gender pay gap in Colombia. To quantify the role of these factors we perform counterfactual decomposition methods that allow to split the total gap into the contribution of the gender share of employment at the industry level, the demographic composition and the characteristics pay premia. This is possible by adapting the classical Oaxaca-Blinder decomposition to a two-step procedure, which is illustrated through Monte Carlo simulations. Using Colombian data for 2019 and exploiting the heterogeneity at the industry and the occupation level, findings suggest that the three components shape the gender pay gap. While differences in returns are the main force driver of the existing gap, the gender employment share, and the composition of workers across industries and occupations provide mixed results.

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