Working Paper: CEPR ID: DP17253
Authors: Sonia Bhalotra; Manuel Fernández; Fan Wang
Abstract: We develop an equilibrium model of the labor market to investigate the jointevolution of gender gaps in labor force participation and wages. We do thisoverall and by task-based occupation and skill, which allows us to study distributionaleffects. We structurally estimate the model using data from Mexicoover a period during which women's participation increased by fifty percent.We provide new evidence that male and female labor are closer substitutes inhigh-paying analytical task-intensive occupations than in lower-paying manualand routine task-intensive occupations. We find that demand trends favoredwomen, especially college-educated women. Consistent with these results, wesee a widening of the gender wage gap at the lower end of the distribution,alongside a narrowing at the top. On the supply side, we find that increasedappliance availability was the key driver of increases in the participation of unskilledwomen, and fertility decline a key driver for skilled women. The growthof appliances acted to widen the gender wage gap and the decline of fertility tonarrow it. We also trace equilibrium impacts of growth in college attainment,which was more rapid among women, and of emigration, which was dominatedby unskilled men. Our counterfactual estimates demonstrate that ignoring thecountervailing effects of equilibrium wage adjustments on labor supplies, as iscommonly done in the literature, can be misleading.
Keywords: female labor force participation; gender wage gap; technological change; supply-demand framework; task-based approach; wage distribution; wage inequality
JEL Codes: J16; J21; J24; J31; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increases in women's labor force participation (LFP) (J21) | downward pressure on wages at the lower end of the distribution (F66) |
| availability of household appliances (L68) | increase in unskilled women's participation (F66) |
| decline in fertility (J13) | increase in skilled women's participation (J21) |
| demographic shifts (emigration dominated by unskilled men) (J11) | impact on gender wage dynamics (J31) |
| growth of appliances (L68) | widening of the gender wage gap (J79) |
| fertility decline (J19) | narrowing of the gender wage gap (J79) |
| demand trends favoring women (J21) | widening of the gender wage gap at the lower end (J31) |
| demand trends favoring women (J21) | narrowing of the gender wage gap at the top (J31) |
| male and female labor are closer substitutes in high-paying analytical task-intensive occupations (J29) | greater downward pressure on wages at the lower end (F66) |
| male and female labor are closer substitutes in lower-paying manual or routine task-intensive occupations (J29) | lesser downward pressure on wages at the upper end (J31) |