On Gender Gaps and Self-Fulfilling Expectations: Theory, Policies and Some Empirical Evidence

39 Pages Posted: 20 Aug 2008

See all articles by Sara de la Rica

Sara de la Rica

Universidad del Pais Vasco; IZA Institute of Labor Economics

Juan Jose Dolado

Universidad Carlos III de Madrid - Department of Economics; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

C. Garcia-Peñalosa

National Center for Scientific Research (CNRS) - GREQAM; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2008

Abstract

This paper considers a simple model of self-fulfilling expectations that leads to a multiple equilibrium of gender gaps in wages and participation rates. Rather than resorting to moral hazard problems related to unobservable effort, like in most of the related literature, our model fully relies on statistical discrimination. If firms believe that women will quit their jobs more often than equally productive men when shocks affecting household chores take place, our model predicts that this belief will increase the wage gap in favour of men which, in turn, will increase the female share of housework and exacerbate lower female participation in the labour market. Hence, both effects lead to a gendered equilibrium with large gaps, even though an ungendered equilibrium with no gaps is feasible. We examine the effects of gender-based and gender-neutral subsidies and find that the latter are more effective in removing the gendered equilibrium. Empirical analysis based on a time use survey for Spain is provided to test most of the implications of the model.

Keywords: gender wage gap, multiple equilibria, participation

JEL Classification: J16, J71

Suggested Citation

de la Rica, Sara and Dolado, Juan Jose and Garcia-Penalosa, Cecilia, On Gender Gaps and Self-Fulfilling Expectations: Theory, Policies and Some Empirical Evidence (June 2008). CEPR Discussion Paper No. DP6883, Available at SSRN: https://ssrn.com/abstract=1240193

Sara De la Rica

Universidad del Pais Vasco ( email )

Barrio Sarriena s/n
Leioa, Bizkaia 48940
Spain

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Juan Jose Dolado (Contact Author)

Universidad Carlos III de Madrid - Department of Economics ( email )

Calle Madrid 126
Getafe, 28903
Spain
+34 91 624 9300 (Phone)
+34 91 624 9313 (Fax)

HOME PAGE: http://www.eco.uc3m.es/english/staff/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Cecilia Garcia-Penalosa

National Center for Scientific Research (CNRS) - GREQAM ( email )

Centre de la Vieille Charité
2, rue de la Charité
Marseille, 13002
France
+33 491 140746 (Phone)
+33 491 900227 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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