Job market paper:
Wage and Employment Discrimination by Gender in Labor Market Equilibrium [Job market paper]
Abstract: The gender wage gap widens substantially over the lifecycle, especially between highly educated men and women. This paper develops an equilibrium search model to study the interactions of three potential explanations for the widening gender gap: human capital accumulation, preference for job amenities, and employers' statistical discrimination in wages and hiring. In the model, men and women differ in quit probabilities, parental leave lengths, and preferences for amenities before and after having children. A novel feature of my model is that employers make decisions on both the “intensive” wage margin and the “extensive” hiring margin as they take into account the above gender differences. Estimating the model on administrative employer-employee data combined with occupational level survey data on amenities from Finland, I find that 44% of the gender wage gap in early career is attributed to employers’ statistical discrimination based on fertility concerns, whereas gender differences in labor market attachment explain 70% of the gap in late career. Both hiring discrimination and preference for amenities draw women to low-productivity jobs early in the lifecycle, and slow down women's 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 counterfactual shows that requiring firms to pay men and women the same wage closes the wage gap by 15% on average, but has unintended consequences as employers adjust on the hiring margin.
Abstract: 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 made them more likely to separate from pre-birth employers. Firms with greater exposure to the reform hired more workers and increased incumbent hours, incurring a wage cost equivalent to 1.5 workers for each additional worker on extended leave. Manufacturing firms with higher exposure also experienced a decline in sales and valueadd per worker. These adjustment costs varied by the availability of substitutes in the local labor market and within the firm. We also find suggestive evidence that the reform reduced hiring of young women and lowered their starting wages compared to men and older women.
Abstract: In the United States, the wage gap between college educated men and women increases from 7% to 38% in the first 15 years after labor market entry, while that for high school graduates increases from 20% to 32%. We develop an equilibrium search model to study firms' wage setting decisions in high- and low-skilled labor markets. Equally productive men and women could face different wage offers as employers take into account expected gender differences in mobility behaviors, human capital dynamics, and fertility-related interruptions. We estimate the model on NLSY79 data and decompose the life-cycle wage gap into three components: the human capital difference between men and women, the productivity difference in the jobs they are in, and firms' differential wage-setting across genders. We find that the gender wage gaps for high and low education groups are driven by different forces. For college-graduated men and women, most of the lifecycle wage gap can be attributed to women’s high quit rates and low rates of within-job wage growth compared to men. For high school workers, the gender gap is mainly driven by gender differences in fertility behaviors and women’s low job-finding rate in non-employment. Firms’ equilibrium wage offers are substantially different for comparable men and women, and this is a major factor of the gender wage gap in both education groups.