Abstract
This paper provides an additional perspective on the well documented gender gap in Israel. Applying methods of firm and worker effects estimation resulted in an overall 29% contribution of firm premium to the gender gap. Sorting of women into lower wage-premium firms (also within the same industry) explains a significant part of the gap, while negligible part is due to within firm inequality, in particular at the bottom 50% of the wage distribution. Heterogeneity in the firm premium gap was found across industries and parental status, where non-parents workers face much lower gap, in line with findings on "motherhood penalty". Based on these estimates, I suggest that policy should focus on ensuring equal opportunities rather than regulating equal pay within a firm.