The impact of firms and inter-sectoral structural change on the gender wage gap

Using matched employer–employee administrative tax data from South Africa, this paper examines the role of firms and sectors in the gender wage gap. Firm-wage premia account for approximately 20 percent of overall wage variation, and gender differences in these premia explain nearly 60 percent of the unadjusted gender wage gap. A decomposition following Card et al. (2016) shows that inter-sectoral sorting is the dominant mechanism: gender differences in access to high-premium sectors account for the majority of the gap in firm-wage premia. High-wage, male-dominated sectors, particularly mining and manufacturing, contribute disproportionately to the aggregate disparity. Counterfactual shift-share simulations indicate that reallocating female employment toward high-premium sectors mechanically reduces the aggregate gap, with the largest effects arising in sectors where baseline disparities are sorting driven.