| Summary: | Methods for estimating the scope of unjustified inequality differ in their sensitivity to address institutional and structural deficiencies. In the case of gender wage gaps, adjusting adequately for individual characteristics requires prior assessment of several important deficiencies, primarily whether a given labor market is characterized by gendered selection into employment, gendered segmentation and whether these mechanisms differ along the distribution of wages. Given that countries are characterized by differentiated prevalence of these deficiencies, ranking countries on gender wage gaps is a challenging task. Whether a country is perceived as more equal than others depends on the interaction between the method of adjusting gender wage gap for individual characteristics and the prevalence of these deficiencies. We make the case that this interaction is empirically relevant by comparing the country rankings for the adjusted gender wage gap among 23 EU countries. In this relatively homogeneous group of countries, the interaction between method and underlying deficiencies leads to substantial variation in the extent of unjustified inequality. A country may change its place in the ranking by as much as ten positions-both towards greater equality and towards greater inequality. We also show that, if explored properly, this variability can yield valuable policy insights: changes in the ranking positions across methods inform on the policy priority of the labor market deficiencies across countries in relative terms.
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