Gender Wage Gaps and the Rise of Women's Labour Force Participation: Structural Estimates for Mexico

The talk will discuss how the evolution of the gender wage gap over time can be analysed with large-scale representative survey data. The analysis is for Mexico, where there has been a massive increase in women’s labour supply since 1990.


Gender Wage Gaps and the Rise of Women's Labour Force Participation: Structural Estimates for Mexico

Sonia Bhalotra (Essex), Manuel Fernandez (Oxford/Essex), Atheen Venkataramani (Pennsylvania).

Abstract
Rapid growth in women’s labour force participation is one of the most striking features of modernizing economies. While this is often associated with women’s empowerment, simple economic theory suggests that increases in the labour supply of women will depress the wages of women, potentially widening the gender wage gap. But this is only if women are not substitutes for men in the labour market. To examine this, we obtain structural estimates of an equilibrium model of the labour market in which the elasticity of substitution between male and female labour varies with the task content of occupations and, hence, across the wage distribution. We use individual data on employment and earnings in Mexico that span more than a quarter of a century, capturing one of the most rapid contemporary increases in women’s labour supply. We find that the substitutability between male and female labour is lower in low-paid manual/routine occupations than in high-paid abstract task-intensive occupations. Consistent with this, the generalized increase in women’s labour supply narrowed the gender wage gap at the top of the wage distribution, while widening it at the bottom. We estimate that trends in the demand side of the economy favoured women, attenuating the supply-driven downward pressure on women’s wages in low-paid occupations, and fully counteracting it in high-paid occupations.

Bio
Manuel Fernandez is a Senior Research Officer at the Institute for Social and Economic Research, University of Essex. He is finishing a PhD in Economics at the University of Oxford. Before the PhD, Manuel worked at the Office of the Chief Economist for Latin America in the World Bank. His research focuses on two areas: the impact of structural change on the distribution of earnings, and the disruptive effects of innovations in information and communication technologies on the labour market.