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Faculty of Economics

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Amano-Patiño, N., Baron, T. and Xiao, P.

Equilibrium Wage-Setting and the Life-Cycle Gender Pay Gap


Abstract: We develop an equilibrium search model with human capital dynamics and parental leave episodes to investigate the life-cycle gender wage gap. Estimating the model on NLSY79, we find that firms’ gender-specific wage offers account for 55% of the gender wage gap for high school graduates and 47% for college graduates, whereas the human capital channel is important only for the college group later in the life-cycle. Gender gaps in search capital and job segregation play smaller roles. Policies that improve women’s employment stability are most effective in shifting firms’ offers, and are further enhanced by policies promoting women’s within-job development.

Keywords: Gender wage gap, life-cycle, firm heterogeneity, human capital, job search

JEL Codes: J16 J24 J31 J64.

Author links: Noriko Amano Patino  


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