Home Production, Market Production and the Gender Wage Gap: Incentives and Expectations

51 Pages Posted: 25 May 2006 Last revised: 14 Nov 2022

See all articles by Stefania Albanesi

Stefania Albanesi

New York University (NYU) - Leonard N. Stern School of Business; Columbia University, Graduate School of Arts and Sciences, Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Claudia Olivetti

Boston College; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2006

Abstract

The purpose of this paper is to study the joint determination of gender differentials in labor market outcomes and in the household division of labor. Specifically, we explore the hypothesis that incentive problems in the labor market amplify differences in earnings due to gender differentials in home hours. In turn, earnings differentials reinforce the division of labor within the household, leading to a potentially self-fulfilling feedback mechanism. The workings of the labor market are key in our story. The main assumptions are that the utility cost of work effort is increasing in home hours, and that higher effort should correspond to higher incentive pay. Household decisions are Pareto efficient, leading to a negative correlation between relative home hours and earnings across spouses. We use the Census and the PSID to study these predictions and find that they are supported by the data.

Suggested Citation

Albanesi, Stefania and Albanesi, Stefania and Olivetti, Claudia, Home Production, Market Production and the Gender Wage Gap: Incentives and Expectations (May 2006). NBER Working Paper No. w12212, Available at SSRN: https://ssrn.com/abstract=902564

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