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A Quantitative Theory of the Gender Gap in Wages

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  • Andrés Erosa
  • Luisa Fuster
  • Diego Restuccia

Abstract

Using panel data from the National Longitudinal Survey of Youth (NLSY), we document that gender differences in wages almost double during the first 20 years of labor market experience and that there are substantial gender differences in employment and hours of work during the life cycle. A large portion of gender differences in labor market attachment can be traced to the impact of children on the labor supply of women. We develop a quantitative life-cycle model of fertility, labor supply, and human capital accumulation decisions. We use this model to assess the role of fertility on gender differences in labor supply and wages over the life cycle. In our model, fertility lowers the lifetime intensity of market activity, reducing the incentives for human capital accumulation and wage growth over the life cycle of females relative to males. We calibrate the model to panel data of men and to fertility and child related labor market histories of women. We find that fertility accounts for most of the gender differences in labor supply and wages during the life cycle documented in the NLSY data.

Suggested Citation

  • Andrés Erosa & Luisa Fuster & Diego Restuccia, 2005. "A Quantitative Theory of the Gender Gap in Wages," Working Papers tecipa-199, University of Toronto, Department of Economics.
  • Handle: RePEc:tor:tecipa:tecipa-199
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    Cited by:

    1. Thomas Baudin & David de la Croix & Paula E. Gobbi, 2015. "Fertility and Childlessness in the United States," American Economic Review, American Economic Association, vol. 105(6), pages 1852-1882, June.
    2. Andres Erosa & Luisa Fuster & Diego Restuccia, 2010. "A General Equilibrium Analysis of Parental Leave Policies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(4), pages 742-758, October.
    3. Jeremy Greenwood & Nezih Guner, 2009. "Marriage and Divorce since World War II: Analyzing the Role of Technological Progress on the Formation of Households," NBER Chapters,in: NBER Macroeconomics Annual 2008, Volume 23, pages 231-276 National Bureau of Economic Research, Inc.
    4. Christian Siegel, 2012. "Female Employment and Fertility - The Effects of Rising Female Wages," CEP Discussion Papers dp1156, Centre for Economic Performance, LSE.
    5. Cociuba, Simona E. & Ueberfeldt, Alexander, 2015. "Heterogeneity and long-run changes in aggregate hours and the labor wedge," Journal of Economic Dynamics and Control, Elsevier, vol. 52(C), pages 75-95.
    6. Tiago Cavalcanti & José Tavares, 2016. "The Output Cost of Gender Discrimination: A Model‐based Macroeconomics Estimate," Economic Journal, Royal Economic Society, vol. 126(590), pages 109-134, February.
    7. Joanna Tyrowicz & Magdalena Smyk & Lucas van der Velde, 2018. "A cautionary note on the reliability of the online survey data – the case of Wage Indicator," IAAEU Discussion Papers 201805, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    8. Fernando Borraz & Cecilia Robano, 2010. "Brecha Salarial en Uruguay," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 25(1), pages 49-77, June.
    9. Krzysztof Makarski & Joanna Tyrowicz & Magda Malec, 2018. "Evaluating welfare and economic effects of raised fertility," GRAPE Working Papers 25, GRAPE Group for Research in Applied Economics.
    10. Rainald Borck, 2011. "Adieu Rabenmutter - The Effect of Culture on Fertility, Female Labour Supply, the Gender Wage Gap and Childcare," CESifo Working Paper Series 3337, CESifo Group Munich.
    11. Julie L. Hotchkiss & John C. Robertson, 2006. "Asymmetric labor force participation decisions over the business cycle: evidence from U.S. microdata," FRB Atlanta Working Paper 2006-08, Federal Reserve Bank of Atlanta.
    12. Laun, Tobias & Wallenius, Johanna, 2017. "Having It All? Employment, Earnings and Children," Working Paper Series 2017:6, Uppsala University, Department of Economics.
    13. 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.
    14. Alexander Ueberfeldt, 2009. "Who's afraid of population aging?," 2009 Meeting Papers 778, Society for Economic Dynamics.

    More about this item

    Keywords

    Gender wage gap; employment; experience; fertility; human capital;

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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