We present a theoretical explanation of the gender wage gap which turns on the interaction between men and women in households.In equilibria where men are over-represented in full-time work, we show that firms rationally choose to hire women only at strictly lower wages than men.The model developed predicts a gap even controlling for education, occupation and industry of workers and does so in a competitive labor market where there exist no inherent gender differences. We test our theory using CPS data over the period 1979-98 and find it is strongly supported by the data.
|Place of Publication||Tilburg|
|Number of pages||36|
|Publication status||Published - 2000|
|Name||CentER Discussion Paper|
- gender discrimination
- household models
- wage gap