A Quantitative Theory of the Gender Gap in Wages

Andres Erosa (), Luisa Fuster () and Diego Restuccia ()

Working Papers from University of Toronto, Department of Economics

Abstract: Using panel data from the National Longitudinal Survey of Youth (NLSY), we document that gender differences in wages almost double during the first 20 years of labor market experience and that there are substantial gender differences in employment and hours of work during the life cycle. A large portion of gender differences in labor market attachment can be traced to the impact of children on the labor supply of women. We develop a quantitative life-cycle model of fertility, labor supply, and human capital accumulation decisions. We use this model to assess the role of fertility on gender differences in labor supply and wages over the life cycle. In our model, fertility lowers the lifetime intensity of market activity, reducing the incentives for human capital accumulation and wage growth over the life cycle of females relative to males. We calibrate the model to panel data of men and to fertility and child related labor market histories of women. We find that fertility accounts for most of the gender differences in labor supply and wages during the life cycle documented in the NLSY data.

Keywords: Gender wage gap; employment; experience; fertility; human capital (search for similar items in EconPapers)
JEL-codes: J2 J3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-hrm, nep-lab and nep-ltv
Date: 2005-09-11
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Working Paper: A quantitative theory of the gender gap in wages (2005)
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