An Equilibrium Analysis of the Gender Wage Gap
Publikation: Working paper
Dokumenter
- Wp-06-08
Forlagets udgivne version, 236 KB, PDF-dokument
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
Originalsprog | Engelsk |
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Udgivelsessted | Cph. |
Udgiver | Department of Economics, University of Copenhagen |
Antal sider | 39 |
Status | Udgivet - 2006 |
Bibliografisk note
JEL Classification: D13, J16, J22, J30
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