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Estimating a Dynamic Adverse-Selection Model: Labour-Force Experience and the Changing Gender Earnings Gap 1968--1997

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  • George-Levi Gayle
  • Limor Golan

Abstract

This paper addresses two questions: What accounts for the gender gap in labour-market outcomes? What are the driving forces behind the changes in the gender labour-market outcomes over the period 1968--1997? It formulates a dynamic general equilibrium model of labour supply, occupational sorting, and human-capital accumulation in which gender discrimination and an earnings gap arise endogenously. It uses this model to quantify the driving forces behind the decline in the gender earnings gap and the increase in female labour-force participation, the proportion of women working in professional occupations, and hours worked. It finds that labour-market experience is the most important factor explaining the gender earnings gap. In addition, statistical discrimination accounts for a large fraction of the observed gender earnings gap and its decline. It also finds that a large increase in aggregate productivity in professional occupations plays a major role in the increase in female labour-force participation, number of hours worked, and the proportion of females working in professional occupations. Although of less importance, demographic changes account for a substantial part of the increase in female labour-force participation and hours worked, whereas home production technology shocks do not. Copyright 2012, Oxford University Press.

Suggested Citation

  • George-Levi Gayle & Limor Golan, 2012. "Estimating a Dynamic Adverse-Selection Model: Labour-Force Experience and the Changing Gender Earnings Gap 1968--1997," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 227-267.
  • Handle: RePEc:oup:restud:v:79:y:2012:i:1:p:227-267
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    File URL: http://hdl.handle.net/10.1093/restud/rdr019
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    Cited by:

    1. Francine D. Blau & Lawrence M. Kahn, 2017. "The Gender Wage Gap: Extent, Trends, and Explanations," Journal of Economic Literature, American Economic Association, vol. 55(3), pages 789-865, September.
    2. Nir Jaimovich & Henry Siu & Guido Matias Cortes, 2017. "The End of Men and Rise of Women in the High-Skilled Labor Market," 2017 Meeting Papers 809, Society for Economic Dynamics.
    3. Francesconi, Marco & Parey, Matthias, 2018. "Early gender gaps among university graduates," European Economic Review, Elsevier, vol. 109(C), pages 63-82.
    4. Bruno Decreuse & Linas Tarasonis, 2016. "Statistical Discrimination in a Search Equilibrium Model: Racial Wage and Employment Disparities in the US," Working Papers halshs-01327961, HAL.
    5. Juan J Dolado & Cecilia García-Peñalosa & Linas Tarasonis, 2020. "The changing nature of gender selection into employment over the great recession," Economic Policy, CEPR;CES;MSH, vol. 35(104), pages 635-677.
    6. Barth, Erling & Kerr, Sari Pekkala & Olivetti, Claudia, 2021. "The dynamics of gender earnings differentials: Evidence from establishment data," European Economic Review, Elsevier, vol. 134(C).
    7. George‐Levi Gayle & Andrew Shephard, 2019. "Optimal Taxation, Marriage, Home Production, and Family Labor Supply," Econometrica, Econometric Society, vol. 87(1), pages 291-326, January.
    8. Kai Liu, 2016. "Explaining the gender wage gap: Estimates from a dynamic model of job changes and hours changes," Quantitative Economics, Econometric Society, vol. 7(2), pages 411-447, July.
    9. Bruno Decreuse & Linas Tarasonis, 2021. "Statistical Discrimination in a Search Equilibrium Model: Racial Wage and Employment Disparities in the US," Annals of Economics and Statistics, GENES, issue 143, pages 105-136.
    10. Juan J. Dolado & Cecilia Garcia-Peñalosa & Linas Tarasonis, 2016. "The Changing Nature of Gender Selection into Employment: Europe over the Great Recession," AMSE Working Papers 1620, Aix-Marseille School of Economics, France.
    11. Xiao, Pengpeng, 2021. "Wage and Employment Discrimination by Gender in Labor Market Equilibrium," Working Papers 144, VATT Institute for Economic Research.
    12. Haaland, Venke Furre & Rege, Mari & Telle, Kjetil & Votruba, Mark, 2018. "The intergenerational transfer of the employment gender gap," Labour Economics, Elsevier, vol. 52(C), pages 132-146.
    13. Atsuko Tanaka & Hsuan-chih Lin, 2020. "Employee Investment and Screening based on Labor Force Attachment," Economics Bulletin, AccessEcon, vol. 40(2), pages 1349-1356.
    14. Zvi Eckstein & Osnat Lifshitz, 2011. "Dynamic Female Labor Supply," Econometrica, Econometric Society, vol. 79(6), pages 1675-1726, November.
    15. Strittmatter, Anthony & Wunsch, Conny, 2021. "The Gender Pay Gap Revisited with Big Data: Do Methodological Choices Matter?," IZA Discussion Papers 14128, Institute of Labor Economics (IZA).
    16. Ng, Wung Lik & Wang, Yin-Chi, 2020. "Waiting as a signal: Why women are delaying fertility?," Economic Modelling, Elsevier, vol. 87(C), pages 471-479.
    17. Kautonen, Teemu & Kibler, Ewald & Minniti, Maria, 2017. "Late-career entrepreneurship, income and quality of life," Journal of Business Venturing, Elsevier, vol. 32(3), pages 318-333.

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