On Gender Gaps and Self-fulfilling Expectations: Theory, Policies and Some Empirical Evidence

Sara de la Rica, Juan J. Dolado and Cecilia Garcia-Penalosa ()

No 6883, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper considers a simple model of self-fulfilling expectations that leads to a multiple equilibrium of gender gaps in wages and participation rates. Rather than resorting to moral hazard problems related to unobservable effort, like in most of the related literature, our model fully relies on statistical discrimination. If firms believe that women will quit their jobs more often than equally productive men when shocks affecting household chores take place, our model predicts that this belief will increase the wage gap in favour of men which, in turn, will increase the female share of housework and exacerbate lower female participation in the labour market. Hence, both effects lead to a gendered equilibrium with large gaps, even though an ungendered equilibrium with no gaps is feasible. We examine the effects of gender-based and gender-neutral subsidies and find that the latter are more effective in removing the gendered equilibrium. Empirical analysis based on a time use survey for Spain is provided to test most of the implications of the model.

Keywords: gender wage gap; multiple equilibria; participation (search for similar items in EconPapers)
JEL-codes: J16 J71 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: Written 2008-06

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Related works:
Working Paper: On gender gaps and self-fulfilling expectations: Theory, policies and some empirical evidence (2008)
Working Paper: On Gender Gaps and Self-fulfilling Expectations: Theory, Policies and Some Empirical Evidence (2008)
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