Sex Segregation in German Firms

Achieving gender equality in the labour market is a political goal of the European Union. Beyond moral commitment, however, economic necessity due to demographic change and a subsequent decrease in the German workforce make a better integration of women into the labour market a precondition for sustaining the strength of the German economy. A constant rise in female labour participation up to approximately 70 percent today can be considered a success. Despite doubtlessly positive developments, more female workers in the labour market have not automatically coincided with “better quality” of women’s jobs. In 2009, women in Germany, for instance, earned on average 23 percent less than men. One reason for the different pattern of employment is generally seen in the ongoing sex segregation of occupations and industries. It has been shown that women earn less than men in part due to the fact that they are employed in female-dominated occupations. The study at hand hence deals with sex segregation in German firms. By using the IAB Establishment Panel for measuring sex segregation on the level of enterprises, segregation indices like the index of dissimilarity, also known as Duncan index, are used to compare sex segregation within firms and their sectors. The results show that horizontal sex segregation inside firms is even larger than in the overall labour market. Looking at vertical segregation, the data set is screened for firms which have integrated board rooms. Probit models are used to reveal the characteristics of a firm''s employment policy that lead to a better integration of women. The overall results of the paper show that policies that aim at decreasing sex segregation need – in order to be successful – not only be targeted at the whole labour market, but should take the level of firms into consideration in order to be effective.