The Labor Market Gender Gap in Denmark: Sorting Out the Past 30 Years

We document the declining gap between the average earnings of women and men in Denmark from 1980 to 2010. The decline in the earnings gap is driven by increases in hours worked by women as well as a decline in the gender wage gap. The data show a great deal of segregation across education tracks, occupations, and even workplaces, but this segregation has declined since 1980. These changes in segregation have been accompanied by a reduction in the role of observables in explaining the gender wage gap. The residual gender wage gap has been constant since 1980. The hours gap is not affected by changes in segregation at the occupation and education level: differences in these characteristics for women relative to men do not contribute to the hours gap in 2010 and they did not in 1980. However, a firm-worker fixed effects analysis suggests that 30 percent of the gender hours gap can be explained by the sorting of women into lower-hours workplaces. The hours gap is driven by mothers, the group for whom differences in employer, occupation, education, and experience also imply large differences in wages. The combined effect of hours and wages is a more than 20 percent gender earnings gap among well-attached (halftime-plus) workers between 25 and 60 years old, 10 percent of which cannot be explained by differences in hours, or in the readily observable characteristics of these workers.