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A quantitative theory of the gender gap in wages

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  • Andrés Erosa

    ()
    (IMDEA Ciencias Sociales)

  • Luisa Fuster

    ()
    (IMDEA Ciencias Sociales)

  • Diego Restuccia

    ()
    (University of Toronto)

Abstract

This paper measures how much of the gender wage gap over the life cycle is due to the fact that working hours are lower for women than for men. We build a quantitative theory of fertility, labor supply, and human capital accumulation decisions to measure gender differences in human capital investments over the life cycle. We assume that there are no gender differences in the human capital technology and calibrate this technology using wage-age profiles of men. The calibration of females assumes that children reduce the hours of work of mothers and that there is an exogenous gendergap in hours of work. We find that our theory accounts for all of the increase in the gender wage gap over the life cycle in the NLSY79 data. The impact of children on the labor supply of females accounts for 56% and 45% of the increase in the gender wage gap over the life cycle among non-college and college individuals. We also find that children play an important role in understanding the variation of the gender wage gap across recent cohorts of women and the slower wage growth faced by black women relative to non-black women in the U.S. economy.

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Bibliographic Info

Paper provided by Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales in its series Working Papers with number 2010-04.

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Date of creation: 25 Mar 2010
Date of revision: 20 Oct 2010
Handle: RePEc:imd:wpaper:wp2010-04

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Keywords: gender wage gap; employment; experience; fertility; human capital;

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  19. Andrés Erosa & Luisa Fuster & Diego Restuccia, 2002. "Fertility Decisions and Gender Differences in Labor Turnover, Employment, and Wages," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 856-891, October.
  20. Polachek, Solomon, 2004. "How the Human Capital Model Explains Why the Gender Wage Gap Narrowed," IZA Discussion Papers 1102, Institute for the Study of Labor (IZA).
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