Decomposing wage discrimination in Germany and Austria with counterfactual densities

Using income and other individual data from EU-SILC for Germany and Austria, we analyse wage discrimination for three break-ups: gender, sector of employment, and country of origin. Using the method of Machado and Mata (2005) the discrimination over the whole range of the wage distribution is estimated. Significance of results is checked via confidence interval estimates along the lines of Melly (2006). The economies of Germany and Austria appear structurally very similar and are highly interconnected. One would, therefore, expect to find similar levels and structures of wage discrimination. Our findings deviate from this conjecture significantly.