Francesco Pastore Seconda Università di Napoli Email: francesco.pastore@unina2.it Sarosh Sattar

1. Conference on Shared Prosperity, Inclusion, and Jobs in the Western Balkans June 11 – 13, 2013, Bečići, Montenegro Gender differences in earnings and labor supply in early career: evidence from Kosovo’s school-to-work transition surveypublished in the IZA Journal of Labor and Development Francesco Pastore Seconda Università di NapoliEmail: francesco.pastore@unina2.it SaroshSattar World Bank (PREM, Europe and Central Asia Region) Erwin R Tiongson World Bank (PREM, Europe and Central Asia Region)

2. Outline • Motivation of the paper • Stylised facts about gender differences in Kosovo • Survey of the literature: • On GWG in Kosovo • On GWG among young people • Methodology and data • Results • Concluding remarks

3. Motivation • According to the World Bank (2012), women are often the object of discrimination and violence in Kosovo • Women are at a disadvantage compared to men • In terms of educational attainment • And of labor market outcomes (employment and wages) • Is it the same also for the youngest segment of women? • When does the discrimination start? • Is the gap occurring before or after labor market entry? • Is it related to maternity and child rearing? (we indirectly answer this question) • and to what extent? (we cannot answer this one)

4. Panel (a): primary education or below Panel (b): low secondary education Panel (c): high secondary education Panel (d): tertiary education or above Source: own elaboration on SWT surveys.

5. Stylised facts about the gender gap in Education attainment in Kosovo • Strong educational segmentation: • women have lower education attainment than men; • Illiterate women are 7.2% against 2.2% of men; • Only 5.5% of women have a university degree, which compares to 11.9% for men; • The situation is not improving in recent years because of : • The disruption of the educational system during the war; • The high emigration rate of the youngest age groups. • This educational disparity is masked among the employed, where women tend to be well-educated.

6. Survey of the literature on the GWG in Kosovo • Only few existing data sets have information on wages. They are all older than the SWT survey • World Bank (2003) based on 2002 Labor Force Survey data; • A global study of gender wage disparities (Oostendorp 2009) in 63 countries, including Kosovo, based on 2001 LSMS data; • a study of earnings among emigrants, based on a survey conducted by the Riinvest Institute along Kosovo’s borders (Havolli 2011); • and a recent paper on returns to education based on the 2002 Riinvest Household and Labor Force Survey (Hoti 2011). • Main results of these studies: • The overall gender wage gap is either small or insignificant in Kosovo • Existing studies do not consider the possible impact of positive sample selection of the most skilled and motivated women into employment

7. The data used • School-to-Work Transition (SWT) survey, an unusual survey conducted by the ILO between 2004 and 2006 in eight countries • In September and October 2004, it was implemented in 5 out of 7 regions in Kosovo (Pristina, Mitrovica, Gijlan, Gjakova, and Prizren) • The sample (1336 individuals) is larger than that in any other lfs • Youngest age segment: • age 15–25 years: • Teeenagers and young adults are included • The prime-age (26-29) are missing, • This is problematic because women marry on average at the age of 27 and men at the age of about 30 • Information is missing on province of location

8. Age at marriage Empoyed Non-employed Women in the sample marry much earlier than men, especially the non-employed ones, which suggests that for at least part of the female young population, marrying (and having children) early in life might not be conducive to productive employment. There is a strong correlation between the decision to enter the labor market and the decision to start a family. Women who work tend to postpone their marriage for work-related reasons, more so than men.

9. Weekly hours of work Men’s employment rate (34.5%) exceeds that of women by about 6 percentage points. On average, wages are slightly higher for women, While the number of hours worked is slightly higher for men – by two and a half hours per week The Figure indicates that women tend to work mainly around 40 and 50 weekly hours, whereas men tend to be more frequent in correspondence to a higher number of working hours.

10. Unconditional and conditional gwg

11. Returns to education (in years)

13. JMP decomposition Note: T = total gender wage gap; Q = impact on the wage differential of individual characteristics; P = impact on the wage differential of prices to individual characteristics; U = impact on the wage differential of the residual wage distribution. The male distribution is used as a reference category. The average effect, close to zero, is, in fact, the algebraic sum of gaps of different signs along the wage distribution: although small, the gender gap is positive (in favor of women) at low wage levels, when the educational level of women is higher than that of men and becomes negative (in favor of men) and wider at higher wage levels, when the number of hours worked is higher than that of women. Most of the effect seems to come from differences in characteristics, while differences in prices and the impact of the residual wage distribution seem to be irrelevant, except for the 50th percentile.

14. The GWG by percentile (Machado and Mata decomposition)

15. Quantity effects on the gender pay gap based on JMP (1993)

16. Fairlie (2005) decomposition of factors affecting the gender gap in female labor supply

17. Heckman sample selection procedure

18. Concluding remarks • Among employed men and women there is no evidence of a gender wage gap in favor of men: in the period prior to the childbearing years, women tend to fare as well as their male counterparts. • The Juhn et al. (1993) decomposition analysis reveals that gender wage differences are almost entirely driven by differences in characteristics (rather than either the returns to those characteristics or the residual). • The greater average educational attainment of employed women, among other characteristics, tends to fully offset the gender wage gap. • The Machado and Mata decomposition shows the existence of a positive gap in favor of women at the lower and upper end of the distribution • Fairlie decomposition shows that most part of the large gender gap in labor supply depends on different characteristics of men and women, especially decision regarding marrying and having children • When the analysis controls for sample selection bias and heterogeneity, the returns to women’s education rise, confirming the lower productivity-related characteristics of non-employed women compared to employed women. • The relatively small sample constrains a fuller analysis of the emergence of the gender wage gap, which, according to a small but growing international literature, typically materializes during childbearing years, which is in the case of Kosovo about 27 years for women and 30 for men.