Home Production, Market Production and the Gender Wage Gap: Incentives and Expectations

Stefania Albanesi, Claudia Olivetti

NBER Working Paper No. 12212
Issued in May 2006
NBER Program(s):   EFG   LS

The purpose of this paper is to study the joint determination of gender differentials in labor market outcomes and in the household division of labor. Specifically, we explore the hypothesis that incentive problems in the labor market amplify differences in earnings due to gender differentials in home hours. In turn, earnings differentials reinforce the division of labor within the household, leading to a potentially self-fulfilling feedback mechanism. The workings of the labor market are key in our story. The main assumptions are that the utility cost of work effort is increasing in home hours, and that higher effort should correspond to higher incentive pay. Household decisions are Pareto efficient, leading to a negative correlation between relative home hours and earnings across spouses. We use the Census and the PSID to study these predictions and find that they are supported by the data.

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This paper was revised on January 29, 2007

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Document Object Identifier (DOI): 10.3386/w12212


  • Stefania Albanesi & Claudia Olivetti, 2008. "Code and data files for "Home Production, Market Production and the Gender Wage Gap: Incentives and Expectations"," Computer Codes 06-236, Review of Economic Dynamics.
  • Albanesi, Stefania and Claudia Olivetti. "Home Production, Market Production and the Gender Wage Gap: Incentives and Expectations." Review of Economic Dynamics 12, 1 (January 2009): 80-107.

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