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Estimating a Dynamic Adverse-Selection Model: Labor-Force Experience and the Changing Gender Earnings Gap 1968-93

Author

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  • Limor Golan

    (Carnegie Mellon)

  • George-Levi Gayle

    (Carnegie Mellon)

Abstract

This paper formulates and estimates a dynamic model of labor supply, occupational sorting, human capital accumulation and discrimination to explain the narrowing gender earnings gap from 1968 to 1993. The paper proves the model is identified and develops a three-step estimation technique. Imperfect information significantly amplifies exogenous shocks: statistical discrimination accounts for 36 percent of the observed gender earnings gap in the mid-to-late 1970s, declining to 22 percent in the mid-to-late 1980s. Differences in preferences are comparatively less important: the gap would have been at least 56 percent smaller in the mid-to-late 1970s and would have nearly closed by the mid-to-late 1980s if it was driven only be preference. Increases in overall productivity and demographic changes account for a large percentage of the decline in the gender earnings gap and the increase in female labor market experience, while a relative increase in productivity raises women's representation in professional occupations.

Suggested Citation

  • Limor Golan & George-Levi Gayle, 2008. "Estimating a Dynamic Adverse-Selection Model: Labor-Force Experience and the Changing Gender Earnings Gap 1968-93," 2008 Meeting Papers 301, Society for Economic Dynamics.
  • Handle: RePEc:red:sed008:301
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    Cited by:

    1. George-Levi Gayle & Limor Golan & Robert A. Miller, 2012. "Gender Differences in Executive Compensation and Job Mobility," Journal of Labor Economics, University of Chicago Press, vol. 30(4), pages 829-872.
    2. Claudia Olivetti & Barbara Petrongolo, 2016. "The Evolution of Gender Gaps in Industrialized Countries," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 405-434, October.
    3. 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.
    4. Zvi Eckstein & Osnat Lifshitz, 2011. "Dynamic Female Labor Supply," Econometrica, Econometric Society, vol. 79(6), pages 1675-1726, November.

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