Working paper · 2026
Why Tight Labour Markets Do Not Close Gender Pay Gaps: Evidence from a 27-Country Eurostat Panel
Competition for workers is supposed to bid wages up and close the gender pay gap. Across 27 member states and six years, employment and the pay gap move together instead.
Finding
A scatter plot of employment rate against gender pay gap across 27 EU member states from 2019 to 2024, covering 11 NACE sectors. The fitted line slopes upward, showing a positive association of approximately r = 0.44. This runs against the expectation that tighter labour markets close pay gaps through competition for workers. The association is cross-sectional and does not identify a causal effect.
Method
- A 27-country panel built from Eurostat Labour Force Survey, Job Vacancy Statistics and Structure of Earnings Survey data, covering 2019–2024 across 11 NACE sectors.
- Four composite indices — HPI, LR, ERS and TR — defined over the panel, with a Combined Risk Quadrant typology formed from HPI × ERS.
- Sector decomposition separates the aggregate: finance carries a gap near 25% against an all-sector panel mean near 10.9%, so the headline figure hides most of the variation.
- The same metrics run in production inside WorkforceGuard, on the same warehouse, with a SHA-256 hash-chained governance log — the published figures and the shipped figures cannot silently diverge.
What this does not claim
- This is a working paper. It has not been peer reviewed, and the estimates should be read as provisional.
- The association is cross-sectional. It does not identify a causal effect of labour-market tightness on the pay gap.
- Composite indices are constructed measures. They are defined in the paper and reproducible from it, not standard statistics.
The system behind it
The panel is not a one-off script. It is the warehouse that serves WorkforceGuard in production, so the research figures and the product’s figures come from the same models.
WorkforceGuard AI