Who works for whom and the UK gender pay gap

This study reports novel facts about the UK gender pay gap. We use a representative, longitudinal and employer-employee linked dataset for the years 2002-16. Men’s average log hourly wage was 22 points higher than women’s in this period. We find that 16% of this raw pay gap is accounted for by estimated firm-specific wage effects. This is almost three times the amount explained by the occupation differences between men and women. When we decompose a preadjusted measure of the pay gap, we find that less than 1 percentage point is accounted for by the allocation of men and women across high and low wage firms. In other words, only a small share (6%) of what is traditionally referred to as the ‘unexplained’ part of the pay gap is in fact explained by the differences between men and women in whom they work for