The impact of testosterone on wages

Men earn more than women, this is still rue despite much effort over the past decades. The difference in wages, of course, needs to be measured ceteribus paribus, which means we need to take into account any observable characteristic so that we really compare men and women with the same characteristics doing the same job. This could mean that there is some unobservable characteristic that still matters. Men have more testosterone, and maybe this brings an increase in productivity they are rewarded for. But we typically do not measure that in labor force surveys.

Anne Gielen, Jessica Holmes and Caitlin Myers find a way around this difficulty by looking at twins. Indeed, females with a male twin have been exposed to more testosterone than all-female twin pairs. And males with a female twin got less. Using administrative data from the Netherlands with 80,000 twins, they find that this proxy for testosterone levels has a positive impact on hourly wages for males, but not for females. This new "observable" allows thus to better explain wage dispersion among males, but cannot explain the still remaining male-female wage gap.