Department of Economics Discussion Paper, University of Kent 02,04
Evidence from previous studies suggests that part of the observed wage differential between males and females is due to the spells of non-participation experienced by women. During these career breaks, no new investment in human capital occurs and the existing stock of skills depreciates, placing women at a disadvantage when they re-enter the labour market. By considering a simple life cycle human capital model, it is possible to show that women anticipating interrupted careers will invest in less full-time education and enter the labour market with a lower starting salary than males. This effect is greatest for women anticipating long breaks, or breaks occurring at an early age. Using data from the National Child Development Survey, it is found that women planning spells of non-participation enter the labour market earlier than males and with approximately 10% lower starting salaries.