This paper examines wage discrimination by gender in the reemployment market by looking at the experiences of unemployed individuals and decomposing their wage gap upon reemployment. The Neumark decomposition technique is extended to incorporate selectivity and counter-factual estimates are used to explain the development of the wage gap over time. Whereas total discrimination upon reemployment is declining over time, the part directly attributable to hiring is increasing. Policymakers should consider that employers, constrained by existing legislation that does not address hiring issues directly, are switching over to discriminatory hiring practices that are becoming relatively easier to adopt, less likely to be detected and harder to prove in a court of law.

Kostas Mavromaras is a lecturer in economics at the University of Newcastle upon Tyne, United Kingdom, and Helmut Rudolph is a research officer at the Institute for Employment Research of the Federal Employment Office, Germany. The authors are grateful to three anonymous referees for valuable comments. The usual disclaimer applies. The authors would like to thank the Federal Employment Office for allowing access to the data for this research. Mavromaras has been supported by grant R44.1480 of the University of Newcastle. The data used can be made available to other researchers from May 1998 through April 2001 from IAB, BA, Postfach, Nuremberg 90327, Germany, subject to federal data protection regulations and the approval of the German Federal Employment Office.