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A quantitative theory of the gender gap in wages

Author

Listed:
  • 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.

Suggested Citation

  • Andrés Erosa & Luisa Fuster & Diego Restuccia, 2010. "A quantitative theory of the gender gap in wages," Working Papers 2010-04, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales, revised 20 Oct 2010.
    • Handle: RePEc:imd:wpaper:wp2010-04
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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • 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

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