Abstract
A recent survey found that the unadjusted average hourly net wage rate of female employees in Kosovo exceeded that of male employees. This reverse gender wage gap makes Kosovo a curiosity, though results from other countries suggest that there is an inverse relationship between the size of the gender pay gap in a country and its female labour force participation rate. In the analysis below we estimate earning functions for female and male employees in Kosovo. Using decomposition analyses we then examine the size of the explained and unexplained gender wage gaps. A novel feature of the investigation is that we incorporate into the analysis gender differences in the allocation of time. We find that the superior productivity-related characteristics of female employees in Kosovo hides the magnitude of the difficulties they still face in the labour market. Hence, we conclude that once we focus on workers with similar observed productivity-related characteristics, women in Kosovo are paid significantly less than men.