R&R, American Economic Journal: Applied Economics
Search frictions make worker turnover costly to firms. A three-month parental leave expansion in Sweden provides exogenous variation that we use to quantify firms’ adjustment costs upon worker absence and exit. The reform increased women’s leave duration and likelihood of separating from pre-birth employers. Firms with greater exposure to the reform hired additional workers and increased incumbent hours, incurring additional wage costs. These adjustment costs vary by firms’ availability of internal and external substitutes. Economy-wide analyses show that a higher reform exposure is correlated with fewer hires and lower starting wages of young women compared to men and older women.
Equilibrium Wage-Setting and the Life-Cycle Gender Pay Gap (with Noriko Amano-Patiño and Tatiana Baron). Cambridge Working Papers in Economics No. 2010.
We develop an equilibrium search model with human capital dynamics and parental leave episodes to investigate the life-cycle gender wage gap. Estimating the model on NLSY79, we find that firms’ gender-specific wage offers account for 55% of the gender wage gap for high school graduates and 47% for college graduates, whereas the human capital channel is important only for the college group later in the life-cycle. Gender gaps in search capital and job segregation play smaller roles. Policies that improve women’s employment stability are most effective in shifting firms’ offers, and are further enhanced by policies promoting women’s within-job development.
Wage and Employment Discrimination by Gender in Labor Market Equilibrium [Job market paper]
This paper develops an equilibrium search model to study the mechanisms underlying the life-cycle gender wage gap: human capital accumulation, preference for job amenities, and employers’ statistical discrimination in wage offers and hiring. In the model, men and women differ in turnover behaviors, parental leave lengths, and preference for amenities before and after having children. Capacity-constrained firms anticipate these gender differences when setting wages and making match decisions. Estimating the model on administrative employer-employee data from Finland, I find that a large proportion (44%) of the gender wage gap in early career is attributed to employers’ statistical discrimination based on fertility concerns, whereas gender differences in labor force attachment explain the majority of the gap (70%) in late career. Both hiring discrimination and preference for amenities draw women to low-productivity jobs in early career, and slow down their career progression in the long run. Counterfactual simulations show that shifting two parental leave months from women to men shrinks the wage gap by 13%. A gender quota at top jobs improves women’s representation in high-productivity positions, but firms undo this policy by exerting more wage discrimination. An equal pay policy closes the wage gap by 15% on average, but has unintended consequences as employers adjust on the hiring margin.