The Gender Pay Gap: Statistical Discrimination and Self-Selection

Facultad de Clencias Economicas y Administrativas, FCEA, Documentos de Trabajo FCEA, (2017, No. 31)

39 Pages Posted: 27 Nov 2017

See all articles by Ernesto Cardenas

Ernesto Cardenas

Pontifical University Javeriana Cali

Edgar Villa

Universidad de la Sabana

Date Written: November 21, 2017

Abstract

We develop a two sector competitive equilibrium model that rationalizes the gender pay gap by the coexistence of two mechanisms: a statistical discrimination mechanism linked to a stereotype belief in which women engage in child-rearing activities while men do not and a self-selection mechanism that makes men and women choose differently among unskilled jobs based on their physical endowments. We prove the existence of a competitive equilibrium where the gender pay gap arises. The model explains other empirical regularities related to women in the workplace like the motherhood penalty and the reversal education trend. We found that technological advancements reduce the gap among unskilled workers while an equal parental leave policy can reduce the gap among skilled workers. We study an Equal pay for Equal work policy and that in our model it may be an ineffective way to reduce the gender pay gap.

Keywords: gender pay gap, statistical discrimination, self-selection, equal pay for equal work

JEL Classification: J13, J16, J24, J71

Suggested Citation

Cardenas, Ernesto and Villa, Edgar, The Gender Pay Gap: Statistical Discrimination and Self-Selection (November 21, 2017). Facultad de Clencias Economicas y Administrativas, FCEA, Documentos de Trabajo FCEA, (2017, No. 31). Available at SSRN: https://ssrn.com/abstract=3075592 or http://dx.doi.org/10.2139/ssrn.3075592

Ernesto Cardenas (Contact Author)

Pontifical University Javeriana Cali ( email )

Calle 18 # 118-250
Cali, CO Valle del Cauca
Colombia

Edgar Villa

Universidad de la Sabana ( email )

Campus Universitario del Puente del ComĂșn, Km. 7
Chia, Cundinamarca A.A.140122
Colombia

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