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A Quantitative Theory of the Gender Gap in Wages

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  • Andrés Erosa
  • Luisa Fuster
  • Diego Restuccia

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.

Suggested Citation

  • Andrés Erosa & Luisa Fuster & Diego Restuccia, 2005. "A Quantitative Theory of the Gender Gap in Wages," Working Papers tecipa-199, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-199
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    More about this item

    Keywords

    Gender wage gap; employment; experience; fertility; human capital;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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