Firm Effect and the Israeli Gender Wage Gap
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.