That’s the theme of a new NBER working paper by Jaime Arellano-Bover, Nicola Bianchi, Salvatore Lattanzio, and Matteo Paradise. Here is the abstract:
This paper examines the link between the narrowing of the gender wage gap and the employment situation of young workers, analyzing data from the United States, Italy, Canada, and the United Kingdom. We propose a labor market model in which a large number of older workers can crowd out younger workers in higher-paying positions. This increase in informal jobs equally affects the career paths of young men because young women are more likely to hold high-paying jobs at first. The data strongly supports this group-driven explanation of the narrowing gender pay gap. All of the narrowing of the gap is from (i) new groups of workers entering the labor market with smaller than average wage gaps and (ii) older groups of workers exiting with a gender wage gap above the average. As predicted by the model, the gender wage gap at labor market entry results from the large loss of positions for young men in the wage distribution. Young men experience the greatest loss of positions within high-paying firms, where they become underrepresented over time at a faster rate than young women. Finally, we document that exiting the labor market is the only contributor to the decline in the gender pay gap after the mid-1990s, implying that there is no complete gender pay convergence in the foreseeable future. Consistent with our framework, we find evidence that most of the remaining gender wage gap at entry is due to predetermined educational preferences.
This is one of the best and most interesting papers I’ve seen in a while, and it’s a good example of how academic economics still produces useful results. The topic is important, the hypothesis makes sense, there is evidence to support it, the idea is smart (in the good sense of smart), it has to do with “guys problems,” it has to do with gender gap problems, and it makes a prediction for the future, i.e. there is no complete gender pay convergence anytime soon.
Arellano-Bover has a useful tweet storm on the piece. And here’s a comment from Alice Evans.
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