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Title: A Quantitative theory of the gender gap in wages

Citation Type: Working Paper

Publication Year: 2010

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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 involve a forced reduction in hours of work that falls on females rather than on males and that there is an exogenous gender gap 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, while the rest is due to exogenous gender differences in hours of work. 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.

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Authors: Erosa, Andres; Restuccia, Diego; Fuster, Luisa

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Publication Number: 2010/04

Institution: Madrid Institute for Advanced Studies

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Publisher Location: Madrid, Spain

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

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