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Gender Discrimination Estimation in a Search Model with Matching and Bargaining

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  • Flabbi, Luca

    () (Georgetown University)

Abstract

Gender wage differentials, conditional on observed productivity characteristics, have been considered a possible indication of prejudice against women in the labor market. However, there is no conclusive evidence on whether these differentials are due to labor market discrimination or to unobserved productivity differences. The objective of this paper is to propose a solution for this identification problem by developing and estimating a search model of the labor market with matching, bargaining and employers' taste discrimination. In equilibrium all types of employers wage discriminate women: prejudiced employers because of preference and unprejudiced employers because of spillover effects that worsen the bargaining position of women. Estimation is performed by maximum likelihood on Current Population Survey data for the year 1995. Results indicate that the productivity of women is 6.5% lower than the productivity of men and that about half of the employers are prejudiced against women. Three policy experiments are implemented using the estimated parameters: an equal pay policy, an affirmative action policy and a wage differential decomposition that takes into account equilibrium effects.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1764.

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Length: 62 pages
Date of creation: Sep 2005
Date of revision:
Publication status: published in: International Economic Review, 2010, 51(3), 745-783
Handle: RePEc:iza:izadps:dp1764

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Keywords: maximum likelihood; search models; discrimination; gender differentials; estimation; structural estimation; affirmative action;

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References

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Citations

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Cited by:
  1. Luca Flabbi and James Mabli, 2012. "Household Search or Individual Search: Does It Matter? Evidence from Lifetime Inequality Estimates," Working Papers gueconwpa~12-12-03, Georgetown University, Department of Economics.
  2. repec:hal:journl:halshs-00193372 is not listed on IDEAS
  3. Ambra Poggi, 2008. "Job satisfaction, working conditions and job-expectations," LABORatorio R. Revelli Working Papers Series 74, LABORatorio R. Revelli, Centre for Employment Studies.
  4. Luca Flabbi, 2004. "Gender Discrimination Estimation in a Search Model with Matching and Bargaining," 2004 Meeting Papers 367, Society for Economic Dynamics.
  5. Marco Leonardi & Luca Flabbi, 2008. "Sources of Earnings Instability: Estimates from an On-the-Job Search Model of the U.S. Labor Market," 2008 Meeting Papers 308, Society for Economic Dynamics.
  6. Flabbi, Luca & Moro, Andrea, 2012. "The effect of job flexibility on female labor market outcomes: Estimates from a search and bargaining model," Journal of Econometrics, Elsevier, vol. 168(1), pages 81-95.
  7. Sara Rica & Juan Dolado & Cecilia Garcia Peñalosa, 2012. "GINI DP 24: On gender gaps and self-fulfilling expectations: An alternative approach based on paid-for-training," GINI Discussion Papers 24, AIAS, Amsterdam Institute for Advanced Labour Studies.
  8. Flabbi, Luca, 2010. "Prejudice and gender differentials in the US labor market in the last twenty years," Journal of Econometrics, Elsevier, vol. 156(1), pages 190-200, May.
  9. Liu, Kai, 2012. "Explaining the Gender Wage Gap: Estimates from a Dynamic Model of Job Changes and Hours Changes," Discussion Paper Series in Economics 15/2012, Department of Economics, Norwegian School of Economics.
  10. G. Sulis, 2007. "Gender Wage Differentials in Italy: a Structural Estimation Approach," Working Paper CRENoS 200715, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  11. repec:aia:ginidp:dp24 is not listed on IDEAS
  12. Usui, Emiko, 2012. "Gender Occupational Segregation in an Equilibrium Search Model," CIS Discussion paper series 560, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
  13. Waisman, Gisela & Larsen, Birthe, 2008. "Who is Hurt by Discimination?," SULCIS Working Papers 2008:4, Stockholm University Linnaeus Center for Integration Studies - SULCIS.
  14. Flabbi, Luca & Leonardi, Marco, 2010. "Sources of earnings inequality: Estimates from an on-the-job search model of the US labor market," European Economic Review, Elsevier, vol. 54(6), pages 832-854, August.

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