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A theory of the gender pay gap. Evidence from Colombia and the United States

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  • Edgar Villa; Luz Karime Abadía; Ernesto A. Cárdenas
  • Luz Karime Abadía
  • Ernesto A. Cárdenas

Abstract

We construct a competitive model that explains the gender pay gap per hour by a statistical discrimination mechanism based on unobserved effort provided by men and women in accordance to an intrahousehold division of labor in which only women engage in child rearing activities. For unskilled labor an additional physical endowment effect arises and increases the pay gap against women. The model explains several empirical regularities in the literature of regression analysis. We show empirical evidence for Colombia and the United States that is consistent with the predictions of the model. Further, we study an equal parental leave and equal pay for equal work policies and find conditions for these policies to be effective at reducing the pay gap.

Suggested Citation

  • Edgar Villa; Luz Karime Abadía; Ernesto A. Cárdenas & Luz Karime Abadía & Ernesto A. Cárdenas, 2020. "A theory of the gender pay gap. Evidence from Colombia and the United States," Vniversitas Económica 18141, Universidad Javeriana - Bogotá.
    • Handle: RePEc:col:000416:018141
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    More about this item

    Keywords

    Gender Pay Gap; Statistical Discrimination; Self Selection; Equal pay for Equal work.;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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