The UK gender pay gap: Does firm size matter?

Jones, Melanie ORCID: https://orcid.org/0000-0002-0535-8090 and Kaya, Ezgi ORCID: https://orcid.org/0000-0003-1909-2649 2023. The UK gender pay gap: Does firm size matter? Economica 90 (359) , pp. 937-952. 10.1111/ecca.12481

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Abstract

Motivated by the introduction of the UK Gender Pay Gap Reporting legislation to large firms, defined as over 250 employees, we use linked employee-employer panel data from the Annual Survey of Hours and Earnings to explore pre-legislation variation in the gender pay gap by firm size. In doing so, we contribute evidence on the relationship between two prominent empirical regularities in labour economics literature, namely the gender pay gap and firm-size wage premium. We find that both the raw and adjusted gender pay gap increase with firm size in the UK private sector even after controlling for unobserved worker heterogeneity, consistent with the legislation being effectively targeted. However, this conclusion changes after accounting for unobserved firm level heterogeneity. Large firms have smaller within-firm raw gender pay gaps and similar adjusted gender pay gaps when compared to smaller firms. Our findings are not specific to the current definition of large firms but hold more generally, including at alternative proposed size thresholds.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Uncontrolled Keywords:	gender pay gap; firm-size wage premium; linked employee-employer panel data; pay transparency
Publisher:	Wiley
ISSN:	1468-0335
Date of First Compliant Deposit:	21 April 2023
Date of Acceptance:	21 April 2023
Last Modified:	06 Nov 2024 09:44
URI:	https://orca.cardiff.ac.uk/id/eprint/158991

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