Are We There? Differences in Search, Preferences and Jobs between Young Highly Educated Male and Female Workers

Do young highly educated women face higher job search frictions, have stronger preferences for non wage job-specific amenities, and receive job offers entailing lower hourly wages or stronger wage penalties for amenities provision relative to men? I study a recent cohort of young, highly educated American workers, document the existence of a gender pay gap at the beginning of workers’ careers, and provide evidence that its increasing path over years in the labor market can be rationalized by underlying unobservable differences in search frictions, preferences for amenities, and in the characteristics of the job offers that workers receive. Building on the descriptive evidence I collect, I answer the questions above by estimating a model of hedonic job search. I use the estimated parameters to show that young workers’ predicted utility from jobs can be decomposed into components due to wage and wage penalties/gains for amenities provision in the job offers received, preferences for amenities, and workers’ selection into different jobs. The main amenities of interest are flexible schedule, overtime, paid and unpaid parental leave, and child care. I find that young, highly educated male and female employed workers are remarkably similar in terms of both search frictions and preferences for job attributes, while female unemployed workers are less likely to obtain job offers than men, in spite of similar levels of labor market attachment. The job offers that women face, instead, differ from the job offers that men receive. Women tend to be offered low wages, and obtain lower wage gains attached to the provision of amenities relative to men. Wages and amenities-related wage penalties strongly affect the predicted male-to-female gap in utility that young workers obtain from jobs, especially in executive and professional careers. In addition, lower wage gains (or wage losses) that women experience when amenities are provided, tend to expand the gender wage gap in jobs providing benefits like flexibility and parental leave.