SEARCH INTENSITY AND WAGE DIFFERENCES Tairi Rõõm* March 2004 Working Papers of Eesti Pank No 1, 2004

Differences in job search behaviour have long been recognized in theoretical literature as a potential source of wage differentials. The aim of the current paper is to estimate whether there exists a systematic difference in search activity between genders and whether this can explain a part of the gender wage gap. These hypotheses are tested using micro-level data for the years 1998-2000 from the Estonian Labour Force Survey. The empirical model yields a result that unemployed men search more actively for new jobs than women. Controlling for the difference in search intensity significantly reduces the residual gender wage differential.

* I am grateful to Peter Ireland, Don Cox, Aurelijus Dabusinskas, and Marit Hinnosaar for helpful comments and suggestions.

Author's e-mail address: Tairi.Room@epbe.ee

The views expressed are those of the author and do not necessarily represent the official view of Eesti Pank.

Contents

1. Introduction

2. Development of the Gender Wage Gap during Transition

3. Why Might Men Search More Intensely for New Employment than Women?

4. Empirical Methodology

5. Data Description and Estimation Results

5.1. Data

5.2. First-Stage Estimation Results

5.3. Second-Stage Estimation Results

6. Conclusions

References

Appendix 1. Model Variables

1.1. Different Search Methods Used in the Construction of the Search Activity Index

1.2. Regressors

Appendix 2. Appendix 2. Sample Statistics and Empirical Estimates

Search Intensity and Wage Differences, Working Papers of Eesti Pank No 1, 2004 (PDF*)

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