Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82014
Authors: 
Hermann Frederiksen, Elisabeth
Year of Publication: 
2006
Series/Report no.: 
EPRU Working Paper Series 2006-08
Abstract: 
This paper develops a theory of the gender wage gap. In a general equilibrium model, spouses devide their labor between a formal sector and a home sector. Due to indivisibility effects, productivity of labor in the formal sector is negatively related to labor used in the home; at the same time labor inputs are complementary in home production. We show that initial beliefs about the gender wage gap are self-fulfilling, and a central result is multiplicity of equilibria. Spouses allocate their labor equally, if they expect to earn the same wage rates, which ex post reinforces equal wage rates; whereas they allocate their labor differently, if they expect to earn different wage rates. The latter situation manifests itself in a gender wage gap. By use of numerical examples, we show that welfare is highest when spouses allocate labor equally. We relate this finding to policy recommendations.
Subjects: 
gender wage gap
household models
household production
labor markets
JEL: 
D13
J16
J22
J30
Document Type: 
Working Paper

Files in This Item:
File
Size
256.16 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.