Poster #91 - Rethinking Gender Inequality: The Role of Multidimensional Skill Dynamics

• In Event: Friday Poster Reception

Abstract

This paper examines how multidimensional skill dynamics contribute to the gender wage gap. While prior research often relies on unidimensional skill measures, we show that failing to account for heterogeneity in skill accumulation, depreciation, and pricing can lead to misattributing skill-based wage differences to gender discrimination. Using large-scale matched employer-employee data from Denmark, we document that men and women systematically sort into occupations with different skill requirements, even when they begin with similar initial skill endowments. We develop and estimate a continuous-time search model that incorporates amenity preferences, child-related shocks, and potential discrimination. The model recovers unobserved skill dynamics using individuals’ observed occupational histories. Preliminary results indicate that the widening gender wage gap is primarily driven by diverging trajectories in general and cognitive skills, which are closely linked to wage growth. These diverging paths reflect, in part, differences in amenity preferences and the faster depreciation of cognitive skills, which contribute to women sorting out of cognitively demanding occupations. We further conduct counterfactual analyses that decompose observed skill differences into components attributable to initial skill endowments, amenity preferences, and the effects of childbirth. These findings underscore the importance of incorporating multidimensional skill trajectories in analyses of gender inequality.

Author

• Zhuoli Chen, University of Wisconsin-Madison
  Presenting Author