Representation over Rents: Labor Market Beliefs and the Gender Wage Gap

Christine Braun and Ana Figueiredo
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Christine Braun: University of Warwick
Ana Figueiredo: Vrije Universiteit Amsterdam

No 26-077/VI, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We study how labor market beliefs shape the gender wage gap in an equilibrium search model with endogenous wage setting and hiring, in which workers hold subjective expectations about wage offers, job arrival rates, and separation risk. Using data from the Survey of Consumer Expectations to estimate the model, we find that gender differences in beliefs account for 25% of the gender wage gap. Correcting these beliefs partly narrows the gap but is not welfare-improving, as it reduces lifetime earnings for both men and women. In contrast, equalizing labor market fundamentals substantially reduces the wage gap while increasing women's lifetime earnings.

Keywords: Gender wage gap; Labor market beliefs; Job search (search for similar items in EconPapers)
JEL-codes: J16 J31 J64 (search for similar items in EconPapers)
Date: 2026-10-05
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