The gender pay gap at labour market entrance: Evidence from Germany

We investigate wage differentials between German male and female graduates at labour market entrance at all percentiles of the wage distribution. The decomposition of the wage difference is based on a single index approach suggested by DiNardo, Fortin, and Lemieux (1996) and Fortin and Lemieux (1998). The pay gap is decomposed in endowment, price and return-to-skill function effects. These isolated differences are calculated at all percentiles of the wage distribution. Our results reveal higher starting salaries for men at all percentiles of the income distribution, with varying magnitude of the gender pay gap. We observe the endowment and price effect to be favourable for men throughout. The effect of the difference in the return-to-skill function advantages female graduates.