The purpose of this project is to study the joint determination of gender differences in labor market outcomes and the division of labor within the household. The PI's analysis is based on two sets of empirical observations. First, there are persistent gender differences in "adjusted" labor earnings and hours worked, at home and on the market. Second, there is a large variation in gender earnings differentials across industries and occupations. The PI's explore the hypothesis that these differentials arise endogenously from the interaction between the intra-household allocation process and labor contracting between firms and workers. The PI's propose that incentive problems on the labor market, due to private information on household decisions, play a crucial role in the emergence of unequal labor market outcomes across genders. In turn, the differential labor market outcomes influence gender roles within the household, thus generating a feedback mechanism. The presence of incentive problems implies that the earnings structure, as well as the earnings level, should be different across genders. The PI's preliminary empirical work with aggregate data is broadly consistent with this hypothesis. The proposed new work will extend the analysis in a number of directions. Theoretically, the PI's plan to use their framework to evaluate how technological progress in home production may influence gender differences in labor market outcomes and the household division of labor. Empirically, the PI's plan to use micro data to directly evaluate the predictions regarding the interaction between the labor market and the household, as well as the predictions on the earnings structure by gender. Intellectual Merit The intended contribution of this project is twofold. The PI's propose the first, to their knowledge, equilibrium model of the feedback between the gender division of labor within the household and gender differences in labor market outcomes. Typically, supply side theories have been used to explain gender differences in earnings and employment and their evolution over time. These take as given the division of labor within the household and emphasize its role in causing unequal labor market outcomes. By contrast, in our framework, gender roles are endogenous. The centerpiece of their hypothesis is to identify the incentive problem in labor contracting as a source of statistical discrimination on the basis of gender. The PI's are also the first to rationalize the large variance in gender earnings and employment differentials across industries and occupations. The variation in the severity of incentive problems across industries and occupations can be related to differences in the earnings structure and home hours by gender, and within households across spouses. The proposed empirical analysis will use matched household and earnings data to directly evaluate these predictions. Broader Impacts The results of this research will potentially be of interest not only to economists, but also to sociologists, as well as to policymakers. One important implication of the PI's framework is that gender equality on the labor market is intimately linked to equality in the household division of labor. Policies aimed at reducing gender disparities in earning opportunities are likely to fail if they do not include provisions to reduce the expected contribution of women to home production. The research will also be integrated with the PI's teaching, especially at the graduate level. It is expected that graduate research assistants will be introduced to important research skills and potential research topics to develop on their own.
