The gender wage gap in Croatia-estimating the impact of difering rewards by means of counterfactual distributions

The aim of this paper is to estimate the size of changes in and main factors contributing to gender-based wage differentials in Croatia. It utilizes microdata from the Labor Force Surveys of 1998 and 2008 and applies both OLS and quantile regression techniques to assess the gender wage gap across the wage distribution. The average unadjusted gender wage gap is found to be relatively low and declining. This paper argues that employed women in Croatia possess higher-quality labor market characteristics than men, especially in terms of education, but receive much lower rewards for these characteristics. The Machado-Mata decomposition technique is used to account for the sole effect of differing rewards on the gender wage gap. The results suggest that due to differing rewards the gap exceeds 20 percent on average - twice the size of the unadjusted gap - and that it increased somewhat between 1998 and 2008. The gap is found to be the highest at the lower-to-middle part of the wage distribution.