Do Gender Differences in Risk Preferences Explain Gender Differences in Labor Supply, Earnings or Occupational Choice?
AbstractThis paper examines the extent to which differences in risk preferences between men and women explain why women have a lower entrepreneurship rate, earn less, and work fewer hours than men.� Data from the NLSY79 confirms previous findings that women are more risk averse than men. �However, while less risk averse men tend to become self-employed and more risk averse men are likely to choose paid-employment, there is no significant effect of risk preferences on womenâ€™s entrepreneurship decisions.� Similarly, more risk aversion is associated with higher earnings for male entrepreneurs, but it has no effect on female entrepreneurial earnings. Rising rates of risk aversion lower earnings for women, consistent with theoretical effects of risk preferences on labor earnings, but the effects are of modest magnitude.� Risk preferences do not explain variation in hours of work for either men or women.� These findings suggest that widely reported differences in risk preferences across genders play only a trivial role in explaining differences in labor market outcomes between men and women.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 34651.
Date of creation: 02 Dec 2011
Date of revision:
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risk aversion; earnings; labor supply; gender gap; self-employment; Blinder-Oaxaca decomposition;
Find related papers by JEL classification:
- J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-13 (All new papers)
- NEP-DEM-2011-12-13 (Demographic Economics)
- NEP-ENT-2011-12-13 (Entrepreneurship)
- NEP-HRM-2011-12-13 (Human Capital & Human Resource Management)
- NEP-LAB-2011-12-13 (Labour Economics)
- NEP-LMA-2011-12-13 (Labor Markets - Supply, Demand, & Wages)
- NEP-UPT-2011-12-13 (Utility Models & Prospect Theory)
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