Geographical and gender pay gaps in career paths

Abstract

here is a substantive literature examining the gender wage gap, its components and how it changes over time. The decisions that workers make in their career paths when changing occupations or entering new industries have a major impact on the evolution of their wage trajectories. Women and men follow different typical paths across industries and occupations. If changes in career paths are accompanied by geographical moves, these job-related relocations may have an additional wage effect, as differently sized settlements offer different labour market opportunities. Larger cities or metropolitan areas typically offer higher wages than smaller municipalities. The wage returns of geographical relocation may differ by gender, affecting the wage gap between women and men. In our study, we examine the wage effects of occupational and geographical mobility by exploring gender differences over individuals’ careers. We conceptualise the career of individuals as a chronologically ordered sequence of job spells, where each spell is defined by the combination of the employer’s industry and the worker’s occupation. We identify complete career sequences from Hungarian administrative data and use these as explanatory variables to examine the wage premium of urbanisation and the wage effects of geographical relocation. Our results indicate that the wage effects of different types of shifts differ by gender. We also find substantial differences both in the immediate wage benefits and in the long-term expected wages of potential career paths that open up with job changes due to relocation.