Menu Close

Gender Gaps in Wages and Employment: The Role of Employers’ Prejudice


Flabbi, Luca & Tejada, Mauricio (2015). Gender Gaps in Wages and Employment: The Role of Employers' Prejudice.. Boeri, Tito; Patacchini, Eleonora; & Peri, Giovanni (Eds.) (pp. 23-58). Oxford, England: Oxford University Press.


This chapter develops a structural model to separate the part of the wage difference between men and women in the US labor market that is due to productivity and the part that is due to prejudice and/or discrimination. It uses very detailed data on US employer and employees to estimate the model. Interestingly, it finds that for all education groups prejudice explains a substantial part of the gender gap, although that gap decreased between 1995 and 2005. As of 2005 the major gender differential in wages is explained by differences in productivity, except for the group of Masters and PhDs in which, surprisingly, prejudice plays a larger role in 2005 than earlier. This chapter makes three contributions. First, we provide descriptive evidence on gender differentials by education in the US labor market over the last 20 years. Second, we use the structural estimation of a search model of the labor market to identify and quantify the impact of employers' prejudice on labor market gender differentials. Third, we connect the descriptive and analytical findings to recent policy interventions in the US labor market and we perform some policy experiments. While the US labor market has been studied extensively, the novelty of our approach is to use employment and wage data for highly educated men and women, and a search and friction model of the labor market to identify the role of employer prejudice in determining and maintaining the gender gap. The model is based on Flabbi (2010a) and the data are from the Annual Social and Economics Supplement (ASES or March Supplement) and the School Enrollment Supplement (October Supplement) of the Current Population Survey (CPS), which is a representative household survey of the US population.


Reference Type

Book Section

Year Published



Flabbi, Luca
Tejada, Mauricio