Working Paper: NBER ID: w12212
Authors: Stefania Albanesi; Claudia Olivetti
Abstract: The purpose of this paper is to study the joint determination of gender differentials in labor market outcomes and in the household division of labor. Specifically, we explore the hypothesis that incentive problems in the labor market amplify differences in earnings due to gender differentials in home hours. In turn, earnings differentials reinforce the division of labor within the household, leading to a potentially self-fulfilling feedback mechanism. The workings of the labor market are key in our story. The main assumptions are that the utility cost of work effort is increasing in home hours, and that higher effort should correspond to higher incentive pay. Household decisions are Pareto efficient, leading to a negative correlation between relative home hours and earnings across spouses. We use the Census and the PSID to study these predictions and find that they are supported by the data.
Keywords: gender wage gap; home production; labor market incentives
JEL Codes: J2; J3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| incentive problems in the labor market (J29) | lower earnings for women (J31) |
| lower earnings for women (J31) | allocation of home hours (D13) |
| allocation of home hours (D13) | gender wage gap (J31) |
| division of labor within households (D13) | gender earnings differentials (J31) |
| gender wage differentials (J31) | differences in home hours worked by men and women (D13) |
| home production (D13) | market production (L17) |