This is the theme of a new NBER working paper by Jaime Arellano-Bover, Nicola Bianchi, Salvatore Lattanzio and Matteo Paradise. Here is the summary :
This article explores the interaction between the narrowing gender pay gap and stagnant careers of young workers, analyzing data from the United States, Italy, Canada and the United Kingdom. We propose a labor market model in which a greater supply of older workers can crowd out younger workers from higher-paying positions. These negative career spillovers disproportionately affect the career trajectories of younger men, as they are more likely than young women to have higher-paying jobs to begin with. The data strongly support this cohort-driven interpretation of the closing gender wage gap. The entire reduction in the gap comes from (i) cohorts of newer workers entering the labor market with lower-than-average gender pay gaps and (ii) cohorts of older workers who emerge with pay gaps between men and women above average. As the model predicts, the convergence of wages between men and women upon entry into the labor market results from the greater position losses of younger men in the wage distribution. Younger men experience the greatest position losses within the highest-paying firms, in which they become less represented over time and at a faster rate than younger women. Finally, we demonstrate that exit from the labor market is the only contributor to the reduction in the gender wage gap after the mid-1990s, implying that there will be no complete convergence of wages between men and women for the foreseeable future. Consistent with our framework, we find that most of the entry gender wage gap depends on predetermined educational choices.
This is one of the best and most interesting papers I have seen in a long time, and it is a good example of how academic economics still produces useful results. The topic is important, the hypothesis is plausible, there is evidence for it, the idea is clever (in a good way), it relates to “young men’s problems,” it relates to gender gap issues, and it makes a prediction for the future, namely that there will not be full convergence in gender pay in the near future.
Arellano-Bover a storm of useful tweets on the song. And here comment by Alice Evans.
