International Journal of Manpower

Purpose The purpose of this paper is to provide empirical evidence on the gender wage differential of labor market entrants and the determinants of their starting wages. Design/methodology/approach The paper makes use of a unique data set on graduates in economics from a large German university that contains detailed information on the graduates’ course of study, their additional qualifications and their transition from university to the labor market. Based on these data, Mincer-type earnings functions as well as wage decompositions as proposed by Blinder (1973) and Oaxaca (1973) are performed. Findings The paper finds a significant gender wage differential of 7 percent. Blinder-Oaxaca decompositions suggest that the major part of this gap remains unexplained by gender differences in observable characteristics. Research limitations/implications The main feature of our analysis – having a highly homogeneous sample of graduates from a single university – comes at the costs of reduced ability to draw generalized conclusions from our findings. Originality/value This paper investigates the determinants of entry wages for a homogeneous group of high-skilled workers using a unique data set of graduates in business and economics from a large German university. Concentrating on a highly homogeneous sample limits the problem of unobserved heterogeneity, which results in an overestimation of the unexplained component of standard decompositions analyses. Hence, the finding that a large part of the gender pay gap remains unexplained can be considered as an indicator for gender discrimination in the labor market for economics graduates.