Gender wage differentials and discrimination among Israeli managers

The purpose of this paper is to investigate wage differentials and wage discrimination among 9,035 male and female Israeli managers. In our sample, female managers earn on average 64 per cent of their male counterparts. Using a statistical method originally developed by Ronald Oaxaca, we found that out of 36 per cent wage difference, 7.2 per cent were “legitimate”, stemming from differences in human capital characteristics, while 28.8 per cent were “illegitimate”, due to wage discrimination, in the form of different rates of return to the various characteristics. As wage differentials stem mainly from discrimination, affirmative action and comparable worth can serve as a partial remedy.