The gender wage gap in Italy : Study on the changes in the wage gap during the period of financial crisis

Abstract: Everywhere around the world, whether in developing or developed countries, women earn less than men. This phenomenon is in no way new and it has been investigated for many years. Still, in today’s modern society, the wage gap does not appear to be closing. In times of economic instability, such as the economic crisis, the progress towards equality may be pushed back, since specific groups, sectors, and occupations may be affected differently. Therefore, the purpose of this study is to investigate the Italian gender wage gap with a closer look at the fluctuations during the period of the financial crisis. In order to analyse and understand the fluctuations of the pay gap, the three main theories used in the research are the human capital theory, occupational segregation, and theories regarding the labour market structure. By applying the Oaxaca-Blinder decomposition method, this study analyses to what extent the gap could be explained by differences in observable characteristics, such as level of education or age, and how much remains unexplained. The empirical model is applied to the Italian Survey of Household Income and Wealth (SHIW) microdata between the period of 2002 and 2016. The main findings show that the Italian gender wage gap, for the most part, remains unexplained. This indicates that the differentials in pay cannot be accounted for by differences in observable characteristics, such as education, age, contract type. The results of this research show that the Italian wage gap was, to some extent, negatively affected by the financial crisis. Furthermore, implemented austerity measures were found not to have significant negative impacts on the gap, which only increased in the initial phase of the crisis.