Working Paper: CEPR ID: DP2603
Authors: Patrick Francois; Jan C. van Ours
Abstract: We present a theoretical explanation of the gender wage gap that turns on the interaction between men and women in households. In equilibria where men are over-represented in full-time work, we show that firms rationally choose to hire women only at strictly lower wages to men. The model developed predicts a gap even controlling for education, occupation and industry of workers and does so in a competitive labour market where there exist no inherent gender differences. We test our theory using CPS data over the period 1979?98 and find it is strongly supported by the data.
Keywords: gender discrimination; household models; wage gap
JEL Codes: J16; J41; J71
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| household interaction effect (D19) | gender wage differentials (J31) |
| employers condition wage offers on likelihood of having a stay-at-home spouse (J29) | productivity (O49) |
| moral hazard associated with productivity in households (D13) | firms hiring women at lower wages (J79) |
| share of men in high-paying jobs (J31) | gender wage gap (J31) |
| gender wage gap (J31) | dynamics within households (J12) |