Research Details

Abstract

This paper studies the interaction between the decrease in the gender pay gap and the stagnation in the careers of younger workers, analyzing data from the United States, Italy, Canada, and the United Kingdom. Using a model of labor demand, we argue that workforce aging crowds out younger workers from top-paying positions, and that younger men are disproportionally affected because they are more likely than younger women to hold these jobs at baseline. The data strongly support this cohort-driven interpretation of the shrinking gender pay gap. The whole decline in the gap originates from (i) newer worker cohorts who enter the labor market with smaller-than-average gaps and (ii) older worker cohorts who exit the market with higher-than-average gaps. As predicted by the model, the gender convergence at labor-market entry stems from younger men's larger positional losses in the wage distribution. Compared to younger women, younger men experience larger positional losses within both lower-paying and higher-paying firms, and leave higher-paying firms at a faster rate. Finally, we document that gender convergence at labor-market exit is the sole contributor to the decline in the gender gap after the mid 1990s, which implies no convergence in the mean earnings of men and women for the foreseeable future. Consistent with our framework, we find evidence that most of the remaining gender pay gap at entry depends on predetermined educational choices and, therefore, cannot be further affected by demographic shifts affecting conditions at labor-market entry.

Type

Working Paper

Author(s)

Jaime Arellano-Bover, Nicola Bianchi, Salvatore Lattanzio, Matteo Paradisi

Date Published

2024

Citations

Arellano-Bover, Jaime, Nicola Bianchi, Salvatore Lattanzio, and Matteo Paradisi. 2024. One Cohort at a Time: A New Perspective on the Declining Gender Pay Gap.