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Home Production, Market Production and the Gender Wage Gap: Incentives and Expectations

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Author Info
Stephania Albanesi () (Columbia University)
Claudia Olivetti () (Department of Economics, Boston University)

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Abstract

This paper explores the hypothesis that gender wage differentials arise from the interaction between the intra-household allocation of labor and the contractual relation between firms and workers in the presence of private information on workers’ labor market attachment. In our model, households efficiently choose the contribution of each spouse to home production. Workers with high home hours are less attached to market work. Individual home hours and effort applied to market work are private information. Firms offer incentive compatible labor contracts that are constrained-efficient. Optimal contracts imply earnings that are inversely related to home hours. If firms believe women to be less attached to market work than men, they will offer women contracts with lower earnings and lower hours even in the absence of gender differences in productivity. If firms believe that labor market attachment is the same across genders, they will offer the same contract to male and female workers. Spouses’ optimal allocation of home hours will respond to firms’ beliefs, thus generating the potential for statistical discrimination by gender. It is the incentive problem in the labor market that gives rise to statistical discrimination in our model. The central role for informational problems as an important determinant of gender differences in labor market outcomes is motivated by the large variation in gender earnings differentials across industries and occupations observed in the data. We document these differences using Census data and we relate them to the severity of incentive problem across industries and occupations.

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Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Macroeconomics Working Papers Series with number WP2005-004.

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Length: 43 pages
Date of creation: Apr 2005
Date of revision: Aug 2007
Publication status: published, Review of Economic Dynamics, 12, No. 1 (January 2009): 80-107
Handle: RePEc:bos:macppr:wp2005-004

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  7. Albanesi, Stefania & Olivetti, Claudia, 2005. "Home Production, Market Production and the Gender Wage Gap: Incentives and Expectations," CEPR Discussion Papers 4984, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Albanesi, Stefania & Olivetti, Claudia, 2007. "Gender Roles and Technological Progress," CEPR Discussion Papers 6352, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Alberto Alesina & Andrea Ichino & Loukas Karabarbounis, 2007. "Gender Based Taxation and the Division of Family Chores," NBER Working Papers 13638, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Fogli, Alessandra & Veldkamp, Laura, 2007. "Nature or Nurture? Learning and Female Labour Force Dynamics," CEPR Discussion Papers 6324, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Pierre-Andre Chiappori & Murat Iyigun & Yoram Weiss, 2006. "Investment in Schooling and the Marriage Market," DEGIT Conference Papers c011_034, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
    Other versions:
  5. Hanno Lustig & Stijn Van Nieuwerburg & Adrien Verdelhan, 2007. "The Wealth-Consumption Ratio: A Litmus Test for Consumption-based Asset Pricing Models¤," Boston University - Department of Economics - Working Papers Series WP2007-030, Boston University - Department of Economics. [Downloadable!]
  6. de la Rica, Sara & Dolado, Juan José & García-Peñalosa, Cecilia, 2008. "On Gender Gaps and Self-fulfilling Expectations: Theory, Policies and Some Empirical Evidence," IZA Discussion Papers 3553, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Fernández, Raquel, 2007. "Culture as Learning: The Evolution of Female Labour Force Participation Over a Century," CEPR Discussion Papers 6451, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. Pere Gomis-Porqueras & Adrian Peralta-Alva, 2008. "A macroeconomic analysis of obesity," Working Papers 2008-017, Federal Reserve Bank of St. Louis. [Downloadable!]
  9. Raquel Fernandez, 2007. "Culture as Learning: The Evolution of Female Labor Force Participation over a Century," NBER Working Papers 13373, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Mariapia Mendola & Gero Carletto, 2008. "International migration and gender differentials in the home labor market: evidence from Albania," Working Papers 148, University of Milano-Bicocca, Department of Economics, revised Dec 2008. [Downloadable!]
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  11. Schindler, Kati, 2006. "Credit for what? Informal credit as a coping strategy of market women in northern Ghana," Proceedings of the German Development Economics Conference, Berlin 2006 24, Verein für Socialpolitik, Research Committee Development Economics. [Downloadable!]
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  12. Elisabeth Hermann Frederiksen, 2006. "An Equilibrium Analysis of the Gender Wage Gap," EPRU Working Paper Series 06-08, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]
  13. Stefania Albanesi & Claudia Olivetti, 2006. "Home Production, Market Production and the Gender Wage Gap: Incentives and Expectations," NBER Working Papers 12212, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  14. Doepke, Matthias & Hazan, Moshe & Maoz, Yishay D, 2008. "The Baby Boom and World War II: A Macroeconomic Analysis," CEPR Discussion Papers 6628, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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