Gender Wage Differentials in a Competitive Labor Market: The Household Interaction Effect

CentER Discussion Paper No. 2000-85

36 Pages Posted: 13 Dec 2000

See all articles by Patrick Francois

Patrick Francois

University of British Columbia (UBC) - Department of Economics

Jan C. van Ours

Tilburg University - Department of Economics; University of Melbourne - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 2000

Abstract

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.

JEL Classification: J71, J16, J41

Suggested Citation

Francois, Patrick and van Ours, Jan C., Gender Wage Differentials in a Competitive Labor Market: The Household Interaction Effect (September 2000). CentER Discussion Paper No. 2000-85. Available at SSRN: https://ssrn.com/abstract=251529 or http://dx.doi.org/10.2139/ssrn.251529

Patrick Francois (Contact Author)

University of British Columbia (UBC) - Department of Economics ( email )

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada

Jan C. Van Ours

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2880 (Phone)
+31 13 466 3042 (Fax)

University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

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