Exploring gender inequality: firm contribution and policy effects

We discuss how firms contribute to gender wage inequality, focussing on the role of employer heterogeneity and firm-level responses to childbirth and public policies to support parenthood. We show that firm pay policies contribute to the gender pay gap in a number of countries, with sorting into low-paying firms playing a key role. Such sorting is particularly evident after childbirth. The effectiveness of policies depends on responses at the firm level: on the one hand, firms may statistically discriminate against women in response to policies designed to protect mothers; on the other hand, they provide an environment in which, through peer effects, policies to reduce gender inequality achieve broader goals.