Although the gender wage gap in the UK has declined since the 1970s, reductions have been slowest at the top of the distribution. Indeed, wage convergence among graduates has stalled since the 1990s. MiSoC Co-I Bhalotra and MiSoC PhD student Benny together with Fernandez (Los Andes Colombia) investigate the evolution of the gender wage gap among UK graduates. First, they document the evolution of the gender wage gap across the lifecycle and across cohorts. Then they estimate an equilibrium model designed to assess the role of occupational flexibility in driving the gap. Using data from the Labour Force Survey, they document that the wage penalty associated with occupational flexiblity has increased both over the life-cycle and over time. They find a higher demand for male labour at older ages, in particular in inflexible occupations, which contributes to the increase in the gender wage gap over the lifecycle. On the supply side, they find that women’s preferences for job flexibility have increased across cohorts and that this has contributed to widening the wage gap and the flexibility wage penalty over time.
In another project, MiSoC Co-I Bhalotra and her co-authors Fernandez (Los Andes Colombia) and Wang (Houstan, Texas) investigate changes in the distribution of the wage gap in Mexico through 1990-2015, a period during which women’s labour force participation increased 50%. They highlight that increases in women’s participation will tend to widen the gender wage gap as long as there is gender segmentation in the labour market that makes male and female labour imperfect substitutes. They develop and estimate a structural model of the labour market, following the task-based approach of Autor et al. (2003). They allow the elasticity of substitution between male and female labor to vary with the task content of occupations. Their key finding is that the elasticity of substitution is higher in high- paying occupations that are intensive in abstract and analytical tasks than in lower paying manual and routine occupations. This is consistent with the comparative advantage of men diminishing in the share of skilled jobs in the economy. In line with this, they find a narrowing of the gender wage gap towards the upper end of the wage distribution and an increase in the gender wage gap at the low end. They also find that demand side trends favoured women and more so in abstract and analytical occupations. The paper contributes new evidence on the distribution of the gender wage gaps, and adds to a wider literature on technological change, occupational sorting, wage inequality and polarization.