The-gap-between-male-and-female-pay-in-the-Spanish-tourism-industry.pdf

the gap between male and female pay in the spanish tourism industry fernando mun oz bullo n universidad carlos iii de madrid c madrid 126 28903 getafe madrid spain a r t i c l ei n f o article history received 15 january 2008 accepted 15 november 2008 jel classifi cation c34 j16 j31 j71 keywords spanish tourism industry wage discrimination blinder oaxaca decomposition censored models a b s t r a c t this paper analyzes wage differentials between male and female workers in the spanish tourism industry using a large administratively matched employer employee data set obtained from a repre sentative sample of companies this allows us to control for unobserved fi rm specifi c factors likely to affect the magnitude of the gender wage gap our fi ndings indicate that male workers earn on average 6 7 higher monthly wages than their socially comparable female counterparts in particular the type of contract held the qualifi cations required for the job and the specifi c sub sector of employment are very important variables in explaining this gender wage difference we also fi nd that only around 12 of the mean wage difference in the tourism industry cannot be explained by differences in observable char acteristics which is well below the average for the rest of the industries in spain 87 our interpre tation is that minimum wage legislation provides a particularly effective protection to women in the tourism industry which is characterized by a large number of low wage earners 2008 elsevier ltd all rights reserved 1 introduction since the early 1960s tourism has become the principal engine of growth in the services sector in spain it has played a key role both as an income generator and as a source of employment growing at twice as much as the national gross domestic product growth rate according to the spanish labour force survey lfs da quarterly continuous sample based survey directed at households and produced by the national statistics institutedthe employees in tourism accounted for 12 of the working population at the national level and 19 of service employees in 2003 despite this tourism employment has not yet been the subject of widespread academic analysis in spain in contrast to other countries with a comparable standard of living more specifi cally previous research has largely neglected issues of gender wage differentials this paper focuses on the factors that contribute to wage differ ences between male and female workers in the spanish tourism industry when compared to other industries the spanish case is of interest because tourism jobs are often perceived as a requiring lowlevels of entry qualifi cation and b paying lowwages thus it is not surprising if employment in this industry generally does not enjoy high status our results are useful for understanding how well labour markets work in tourism and non tourism industries and for understanding gender inequality for this purpose we use a large administratively matched employer employee data set that contains a representative sample of companies in spain the data set collects data on the monthly wages of workers employed in these companies during a 6 year interval from 1998 to 2003 this data set is uniquely suited to explaining wage differences among workers hired by the same company since it includes the individual labour history of every worker hired by the sample companies no other data set in spain currently meets this criterion without it gathering comparable data from every worker hired by a representative sample of companies in this country simply would not have been feasible our work is mainly descriptive we establish the main features of the wage gap its decomposition and trace some underlying patterns e g which groups of women face particularly small or large wage differentials economists have many theories of why women are paid less than men see for example cain 1986 while we do fi nd that female workers in tourism and non tourism industries are paid less than men our fi ndings have no particular bearing on the validity of the various theories moreover the wage difference alone may not accurately refl ect the women s economic well being relative to men with all these limitations in mind we take the modest fi rst step of documenting the female earnings gap in the spanish tourism industry our main fi ndings indicatethat male workers in tourism earn on average around 6 7 higher monthly wages than their socially comparable female counterparts for non tourism workers this gap is 4 81 among tourism workers most of this gap is due to the type of contract held the qualifi cations required for the job and the tel 34 91 624 58 42 fax 34 91 624 57 07 e mail address fernando munoz uc3m es contents lists available at sciencedirect tourism management journal homepage 0261 5177 see front matter 2008 elsevier ltd all rights reserved doi 10 1016 j tourman 2008 11 007 tourism management 30 2009 638 649 specifi c sub sector of employment in addition our decomposition results reveal that only 12 of the gender wage gap in tourism can be attributed to gender specifi c differences in returns to market skills while for non tourism workers this proportion rises to 87 49 we therefore conclude that even though the gender wage gap is slightly wider among tourism workers than among non tourism workers minimum wage legislation in spain introduced in 1964 provides a more effective protection to women in the tourism industry which is characterized by a higher proportion of low wage earners the rest of this article is organized as follows section 2 provides an overview of the main characteristics of the labour market in spain section 3 provides a survey of the relevant literature on the gender wage gap in tourism industries section 4 takes a fi rst descriptive look at the data section 5 presents the econometric model and section 6 presents the empirical results finally section 7 contains concluding remarks 2 a brief overview of the structural characteristics of the labour market in spain from the late 1970s to the end of the 1990s the spanish economy was affected by mass unemployment and an infl ation differential with the rest of the european union eu economists generally agreed that the malfunctioning labour market was to blame for spain s high level of unemployment and this consensus prompted a series of reforms beginning in the 1980s aimed at reducing dismissal costs limiting the use of temporary contracts and increasing the incentives for fi rms to hire workers from certain population groups using open ended contracts although the economy generally improved from the late 1990s 1the evidence suggests that the labour reforms have done little to reduce the proportion of temporary employment despite the government s best efforts only one in three contracts is permanent as a result spain has the largest proportion of fi xed term contracts in europe this widespread use of fi xed term contracts may affect the gender wage gap if fi xed term contracts have uneven effects on the pay structures of men and women amuedo dorantes richter 1995 sorensen 1989 6the tourism industry also segregates women into areas of employ ment that commercialize their perceived domestic skills and feminine characteristics enloc 1989 kinnaird kothari cox 1984 joshi 1984 mincer b camping sites and other commercial accommodation c restaurants bars and canteens d transport car hire travel agencies tour operators and tour guides e recreational cultural and sporting facilities the industries for non tourism workers are shown in table c in appendix the whole sample was further divided by gender our sample selection criteria reduce the number of observations in the data set to 95 767 male and 77 379 female workers in tourism industriesd1016 and 953 companies respectively and to 130 850 male and 77 098 female workers in non tourism industriesd6512 and 5007 companies respectively the variable of central interest is monthly wages from 1998 to 2003 14since explicit information about hours of work is not available the monthly social security contributions monthly wages henceforth are used as proxies in constant 2003 euros as the general social security scheme establishes upper and lower bounds for monthly wages the wage variable is censored for this reason we use a generalization of oaxaca blinder s decomposition method in which censored data are taken into account see section 5 1 for a detailed description of this method tables 1 and 2 present gender wage differences in the main variables used for both tourism and non tourism sub samples respectively these tables also show differences in mean monthly wages i e the raw gap their signifi cance levels as well as the female male ratios of mean wages among non tourism workers the female male wage ratio is 85 23 86 29 which means that women s mean monthly wage is around 85 86 of men s with very little difference between the two sub samples the econo metric estimationsdto be discussed in detail in the following table 1 distribution of sub samples and mean wages by sex tourism sub sample menwomenraw gapaf m ratiob obs meanstd dev obs meanstd dev monthly real earnings 1252 005602 967 1067 096491 438184 909 85 231 age 16 2933 9601122 327538 7154 39 3071043 731469 6672 78 596 92 997 30 4547 3101286 831610 61343 3021087 53520 1977199 301 84 512 46 6518 7311399 152646 49917 3911069 024462 7273 330 128 76 405 temporary help agency no97 2911244 232602 12996 4311055 36483 7082 188 872 84 820 yes2 7091531 222565 52443 5691384 155583 966147 067 90 395 immigrant no91 8791263 759607 210192 3691069 14489 357194 619 84 600 yes8 1211119 015535 02937 6311042 357515 3609 76 658 93 150 qualifi cation groupc qual 12 7621907 211757 84241 6121854 576735 4805 52 635 97 240 qual 28 2181568 234633 70994 4751358 067584 1971210 167 86 598 qual 38 7731296 263561 149710 7641240 675528 4285 55 588 95 712 qual 449 9821306 401608 9996 35 2691104 367461 4706202 034 84 535 qual 530 2651003 686450 171747 880946 9167428 5684 56 7693 94 344 job tenure months 643 0031203 719594 8973 49 0371058 946508 7036 144 773 87 973 6 and 1220 0831272 213608 0456 19 9561073 407493 4824 198 806 84 373 12 and 2422 4971314 338620 143219 2481079 326464 4748235 012 82 119 24 and 3614 4161270 618580 6839 11 7591070 355455 7938 200 263 84 239 firm size number of employees 2553 8251042 77471 514353 699988 2396 444 8667 54 5304 94 771 25 and 5018 3891254 737566 217417 0011165 243529 4422 89 494 92 868 50 and 1008 4751259 884566 2303 11 5941070 726492 4561 189 158 84 986 10019 3101829 164601 585717 7061209 637536 161619 527 66 131 type of contract open ended60 6111344 195612 7993 49 4911128 095462 416216 1 83 923 per task9 8361178 285547 028411 7781060 31471 7333117 975 89 988 casual22 1931109 155538 4497 25 7071078 919524 7353 30 236 97 274 work experience and training0 1751031 695467 16520 3851054 225481 0072 22 53102 184 interim1 7351495 931617 18462 2251267 978586 142227 953 84 762 other temporary5 449870 8341 541 147110 412713 1886371 1715157 6455 81 897 sub sector in tourism hotels43 6251187 421531 3452 49 8911078 817489 0059 108 604 90 854 camping sites and other commercial accommodation 23 9761013 054436 94633 667947 3209 398 0225 65 7331 93 511 restaurants24 4871583 987710 3596 2251455 229626 3566 128 758 91 871 transport car hire travel agencies tour operators and tour guides 3 2451494 597617 93015 2241251 704490 6467 242 893 83 749 recreational cultural and sporting facilities4 6681172 768547 47164 9941080 541562 9261 92 227 92 136 signifi cant at 1 signifi cant at 5 a raw gap is difference in mean monthly wages between sexes b f m ratio is mean female monthly wages mean male monthly wages c see table a in appendix for categories inside each qualifi cation level 12 as men and women are selected from the broader population which includes those not working sample selection issues arise when deriving the non discrim inatory wage structure however since the data set used has no information on people not working it is not possible to correct for the non random way in which individuals exercise their choice into paid employment thus the estimation of wage equations from samples of employed workers alone induces a sample selection bias not correcting for this selection bias may reduce the estimated gap see stanley signifi cant at 10 a raw gap is difference in mean monthly wages between sexes b f m ratio is mean female monthly wages mean male monthly wages c see table a in appendix for categories inside each qualifi cation level f mun oz bullo n tourism management 30 2009 638 649642 attributed to the existence of a special type of open ended contract called discontinuous open ended contract in spanish contrato fi jo discontinuo which allows for interruptions of the labour relation due to seasonality these interruptions typically in autumn and winter are covered either by working elsewhere for example in construction or by receiving unemploymentbenefi t inother words when each tourist season ends workers hired under discontinuous open ended contracts may be laid off but they expect an implicit re call by the same fi rm in the following tourist season finally among temporary contracts the casual per task contract is the most widespread among non tourism workers figs 1 and 2 show empirical density functions estimated using kernel density estimates by gender for tourism and non tourism workers respectively the fi gures show that the wage distribution of male workers is more skewed to the right than that of female employees thus more men than women are breaking into the highest paying jobs the percentage of men and women whose log earnings are more than one standard deviation above the overall mean log earnings in tourism is 26 61 and 13 78 respectively the fi gures for non tourism workers are 22 46 and 14 47 respectively thus as expected substantially more men than women are in this high earnings group in both sub samples 5 econometric methodology 5 1 a two limit tobit model the observed dependent variable wage denoted by y is censored both from below at the minimum threshold and from above at the maximum threshold to account for repeated observations of the same fi rms at different times and for censoring a two limit random effects tobit model rosett 1 where y is the latent index variable slis the threshold of left censoring andsuthe threshold of right censoring each company is denoted by i and each monthly observation by t a vector of explanatory variables is referred to as x whereasbis its associated vector of coeffi cients the error is denoted by3it as the data are longitudinal the model has a random effects specifi cation which rests on the assumption that the distribution function of the errors is independent of the explanatory variablesdi e the unobservable factors are not correlated with the explanatory variables arellano meng oaxaca 1973 however it must be stressed that the unexplained part of the gender wage gap may be due to factors other than discriminationdin this sense since the data set includes repeated observations of the same fi rms at different times this allows us to isolate a part of the unexplained wage gap which might be due to variable omissions part of the 15 using ordinary least squares ols regression on censored data is inappropriate it results in biased and inconsistent estimates because the standard ols assumption that the error term and the independent variables are uncorrelated is violated maddala 1983 on the other hand a fi xed effects model in which unmeasured company and or time specifi c infl uences are treated as constants rather than random variables represents an alternative to variance components this approach was not pursued because no consistent estimator exists for fi xed effects tobit models maddala 1987 16 likelihood ratio tests for the pooled estimator against random effects panel estimator indicate that the panel level variance component is important and hence the pooled estimations are different from the panel estimations see tables c and 3 the reported coeffi cient ofr which is the panel level variance component provides a similar test it represents the proportion of the total variance contributed by the panel level variance component as the tables show the estimated value ofrin all regressions is signifi cant f mun oz bullo n tourism management 30 2009 638 649643 unexplained gap may be due to variables that are not included in the model for instance intensity of effort is a very important variable explaining wages but this variable is absent from almost all data sets because it is verydiffi cult toobserveand measure thus caution should be exercised when interpreting the unexplained part of the gender wage gap as labour market discrimination it can in principle be related to anything that is not associated with the observable characteristics let ln ym and ln yf be the natural logs of mean male and female wages if the log wage model of the previous section 5 1 is estimated separately for male and female workers then ln ym ln yf xmbbm xfbbf 7 where xmand xfare vectors containing the means of the variables for male and female workers respectively and b bmand b bfare the estimated coeffi cients given this result the log wage differential can be decomposed in two ways lettingdx0 xm0 xf0 and dbb b bm bbf 7 can be written as ln ym ln yf dx0bm xfdb 8 or 0 001 002 003 0 graphs by sex 1000200030000100020003000 womenmen density real monthly wages in 2003 euros fig 2 empirical distribution of monthly wages for non tourism temporary workers by gender 0 001 002 003 004 01000200030000100020003000 womenmen density real monthly wages in 2003 euros graphs by sex fig 1 empirical distribution of monthly wages for tourism temporary workers by gender f mun oz bullo n tourism management 30 2009 638 649644 ln ym ln yf dx0bf xmdb 9 the expression to the left of the equals sign in 8 the explained part is the part of the log wage differential due to differen