Abstract/Summary

This study reports novel facts about the UK gender pay gap. We use a representative, longitudinal and linked employer-employee dataset for 2002-16. Men's average log hourly wage was 22 points higher than women's in this period. We find 16% of this raw pay gap is accounted for by estimated firm-specific wage effects. This is almost three times the amount explained by gender occupation differences. When we decompose a preadjusted measure of the pay gap, we find less than 1 percentage point or a 6% share is accounted for by the gender allocation across high and low wage firms. In other words, only a small share of what is traditionally referred to as the `unexplained' part of the pay gap is explained by the differences between men and women in whom they work for.