Greedy Jobs, Labour Market Institutions, and the Gender Pay Gap*

Abstract

Previous research argues that occupational gender pay gaps arise from greedy jobs within occupations. Greedy jobs involve working long and unpredictable hours in jobs where individuals are not easily substitutable. They engender compensating differentials resulting in an earnings‐to‐hours elasticity that often exceeds 1. This paper shows that greedy jobs also exist in Australia, where labour market institutions differ substantially from those in the United States. It shows that occupational gender earnings gaps are highest in occupations where greedy jobs proliferate. Wage‐setting institutions engender heterogeneous effects on occupational gender earnings gaps. Relative to the United States, occupational gender earnings gaps are smaller in Australia, consistent with evidence that labour market institutions compress the earnings distribution. Within occupations, the use of collective agreements attenuates the size of occupational gender earnings gaps, while the use of individual agreements increases them. Not surprisingly, individuals employed in greedy occupations predominantly use individual agreements to negotiate pay.