An Equilibrium Analysis of the Gender Wage Gap
Publikation: Working paper › Forskning
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An Equilibrium Analysis of the Gender Wage Gap. / Frederiksen, Elisabeth Hermann.
Cph. : Department of Economics, University of Copenhagen, 2006.Publikation: Working paper › Forskning
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TY - UNPB
T1 - An Equilibrium Analysis of the Gender Wage Gap
AU - Frederiksen, Elisabeth Hermann
N1 - JEL Classification: D13, J16, J22, J30
PY - 2006
Y1 - 2006
N2 - This paper develops a theory of the gender wage gap. In a general equilibrium model, spouses devide their labor between a formal sector and a home sector. Due to indivisibility effects, productivity of labor in the formal sector is negatively related to labor used in the home; at the same time labor inputs are complementary in home production. We show that initial beliefs about the gender wage gap are self-fulfilling, and a central result is multiplicity of equilibria. Spouses allocate their labor equally, if they expect to earn the same wage rates, which ex post reinforces equal wage rates; whereas they allocate their labor differently, if they expect to earn different wage rates. The latter situation manifests itself in a gender wage gap. By use of numerical examples, we show that welfare is highest when spouses allocate labor equally. We relate this finding to policy recommendations
AB - This paper develops a theory of the gender wage gap. In a general equilibrium model, spouses devide their labor between a formal sector and a home sector. Due to indivisibility effects, productivity of labor in the formal sector is negatively related to labor used in the home; at the same time labor inputs are complementary in home production. We show that initial beliefs about the gender wage gap are self-fulfilling, and a central result is multiplicity of equilibria. Spouses allocate their labor equally, if they expect to earn the same wage rates, which ex post reinforces equal wage rates; whereas they allocate their labor differently, if they expect to earn different wage rates. The latter situation manifests itself in a gender wage gap. By use of numerical examples, we show that welfare is highest when spouses allocate labor equally. We relate this finding to policy recommendations
KW - Faculty of Social Sciences
KW - household models
KW - household production
KW - labour markets
M3 - Working paper
BT - An Equilibrium Analysis of the Gender Wage Gap
PB - Department of Economics, University of Copenhagen
CY - Cph.
ER -
ID: 327406