Working Paper Revision

The Evolution of Lifetime Hours and the Gender Wage Gap

Abstract: The gender wage gap decreased (opened) from 1940 to 1975 and then increased (closed) until 2010. We use the model introduced in Ben-Porath (1967) to assess the role of gender differences in life cycle profiles of market time in explaining this dynamics. Men's profiles changed little across cohorts, but women's profiles converged to that of men implying, eventually, stronger incentives for women to accumulate human capital. We calibrate the model and find that (1) The 1940-75 decrease of the gap was because men valued human capital more than women due to their working more. The 1975-10 increase was because men's valuation of human capital remain mostly unchanged while women's increased. (2) If men had the hours profiles of women, the wage gap would have closed continuously since 1940 (ceteris paribus), but its level in 2010 would be close to its observed level.

Keywords: gender wage gap; selection bias; female labor force participation; on-the-job investment; human capital; hours;

JEL Classification: J16; J22; J24; J31;

https://doi.org/10.20955/wp.2022.025

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2023-09

Number: 2022-025

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