Productivity, Real Wages, and Gender. A study in Colombian Manufacturing

Orthodox microeconomic theory establishes a positive link between employee wages and productivity in competitive markets. Nevertheless, this perspective often overlooks gender and treats the workforce as a homogeneous category labelled labor, potentially obscuring gender-based inequalities in wage determination. This article addresses the gender wage gap by analyzing, for the first time, at least in an emerging economy such as Colombia, the impact of manufacturing firm's productivity on wages explicitly including gender.

First, we use the GMM two-equation system proposed by Wooldridge (2009) to obtain consistent and unbiased estimates of output elasticities and TFP, respectively. Secondly, we explore the wages-productivity linkage by gender, implementing a dynamic random effect generalized least squares model (GLS) with panel data to address endogeneity issues.

Our main findings reveal, among others, that firms with a higher proportion of female workers (female-intensive firms) generally have higher productivity than those with a higher proportion of male workers (male-intensive firms).

The effect of female-intensive firm's productivity on wages is lower than that of male-intensive firm's productivity, consistent with gender-based wage disparities in the Colombian manufacturing industry.