Estimating a Dynamic Adverse Selection Model: Labor Force Experience and the Changing Gender Earnings Gap 1968-93.

This paper addresses two questions: What accounts for the gender gap in labor-market outcomes? What are the driving forces behind the changes in the gender-labor-market out- comes over the period 1968–97? It formulates a dynamic general equilibrium model of labor supply, occupational sorting and human capital accumulation in which gender discrimination and an earnings gap arise endogenously. It uses this model to quantify the driving forces behind the decline in the gender earnings gap and the increase in women’s labor-force participation, professional-occupation representation and hours worked. It …nds that labor-market experience is the most important factor explaining the gender earnings gap. In addition, statistical dis- crimination accounts for a large fraction of the observed gender earnings gap and its decline. It also …nds that a large increase in aggregate productivity in professional occupations plays a major role in the increase in women’s labor-force participation, professional-occupation repre- sentation and hours worked. Although of less importance, demographic changes account for a substantial part of the increase in female labor-force participation and hours worked, whereas home-production technology shocks do not.

Are There Glass Ceilings for Female Executives?

Fewer women than men become executive managers. They earn less, hold more junior positions, and attrit faster. We compiled a large panel data set on executives and formed a career hierarchy to analyze promotion and compensation rates. Given executive rank and background, women are paid more than men, experience less income uncertainty, and are promoted as quickly. Amongst survivors, being female increases the chance of becoming CEO. Hence the gender pay gap and job rank differences are primarily attributable to female executives attriting at higher rates than males in an occupation where survival is rewarded with promotion and higher compensation.

Gender Differences in Executive Compensation and Job Mobility

Fewer women than men become executive managers. They earn less over their careers, hold more junior positions, and exit the occupation at a faster rate. We compiled a large panel data set on executives and formed a career hierarchy to analyze mobility and compensation rates. We find that, controlling for executive rank and background, women earn higher compensation than men, experience more income uncertainty, and are promoted more quickly. Amongst survivors, being female increases the chance of becoming CEO. Hence, the unconditional gender pay gap and job-rank differences are primarily attributable to female executives exiting at higher rates than men in an occupation where survival is rewarded with promotion and higher compensation.

Counteroffers and Efficiency in Competitive Labor Markets with Asymmetric Information

This paper considers the effect of offer matching on labor market outcomes when the current employer has better information about his worker's productivity than potential employers. Previous research found that when current employers have better information than potential employers, the later use job assignment to infer an employed worker's qualifications. As a result, assignment of workers to jobs is inefficient. I find that when current employers can match outside offers the equilibrium outcome is efficient despite the asymmetric information. I then analyze the effect of the asymmetric information on investment in human capital made by employers and workers, and find these investment levels to be first best.

Intra-Firm Bargaining and Wage Dynamics: A Model of Asymmetric Learning

This paper develops a bargaining model between employers and workers that is driven by asymmetric information between current employers and potential employers. Both the current employer and the worker have the same information regarding the worker's productivity. This information is not available to outside firms which observe only wages. Existing literature on asymmetric information between current and potential employers typically assumes that workers are price takers, and develops job signaling models. In equilibrium, wages are attached to publicly observable characteristics. High and low ability workers in the same job earn the same wages. This result prompts a question: Why are high productivity workers not able to capture a larger portion of the surplus than less productive workers? I develop a wage signaling model in which workers and employers bargain over wages that addresses this question, and analyze how the market learns about employed workers skills. This model generates a semi-separating equilibrium. More able workers compensate their employers by earning lower wages in the first period to elicit higher future offers from outside firms. These workers' wages depend on their actual productivity. Outside firms observe wages and infer these workers' productivity. They then make offers equal to the worker's productivity and the current employer matches the offers. Less able workers for whom it is too costly to reveal ability through wages earn a wage below their productivity in all periods. I then show that this model of bargaining can generate predictions consistent with several regularities in wage patterns of managers within firms. Existing literature which explains empirical findings on wage dynamics in internal labor markets mainly focuses on incentive models or models in which wages are determined in spot markets (JEL J3, C78,D82, D83).

Counteroffers and Efficiency in Labor Markets with Asymmetric Information

This article considers the effect of offer matching on labor market outcomes when the current employer has better information about his worker's productivity than potential employers. Previous research found that when current employers have better information than potential employers, the latter use job assignment to infer an employed worker's qualifications. As a result, assignment of workers to jobs is inefficient. I find that when current employers can match outside offers, the equilibrium outcome may be efficient. I analyze the effect of the asymmetric information on investment in human capital made by employers and workers, and find these investment levels to be first best.

Counteroffers and Efficiency in Labor Markets With Asymmetric Information

This paper considers the effect of offer matching on labor market outcomes when the current employer has better information about his worker’s productivity than potential employers. Previous research found that when current employers have better information than potential employers, the later use job assignment to infer an employed worker’s qualifications. As a result, assignment of workers to jobs is inefficient. I find that when current employers can match outside offers the equilibrium outcome may be efficient despite the asymmetric information. I then analyze the effect of the asymmetric information on investment in human capital made by employers and workers, and find these investment levels to be first best

Wage Signaling: A Dynamic Model of Intrafirm Bargaining and Asymmetric Learning

The article analyzes the effect of employer–worker bargaining on wage dynamics in the presence of asymmetric information between current and potential employers. A failure to reach an agreement leads to output loss. Because the disagreement points depend upon the worker's productivity, productive workers separate themselves from less productive workers and signal their ability through wages. In existing models of asymmetric learning, wages are attached to publicly observable characteristics and wage growth occurs only when there is a change in observable characteristics. This model, in contrast, generates an increase in earnings dispersion in cohorts of workers with similar observable characteristics