The gender pay gap persists, even within occupations and even though women’s educational attainme... more The gender pay gap persists, even within occupations and even though women’s educational attainments are surpassing men’s. Is it because women tend to choose jobs with hours that are more irregular than those taken by men?
University of Economics and Technology. The views expressed are those of the individual authors a... more University of Economics and Technology. The views expressed are those of the individual authors and do not necessarily reect o ¢ cial positions of the Federal Reserve Bank of St. Louis, the Federal Reserve System, or the Board of Governors. This paper explores the estimation of a class of life-cycle discrete choice intergenerational models. It proposes a new semiparametric estimator. It shows that it is p N-consistent and asymptotically normally distributed. We compare our estimator with a modi ed version of the full solution maximum likelihood estimator (MLE) in a Monte Carlo study. Our estimator performs comparably to the MLE in a nite sample but greatly reduces the computational cost. The paper documents that the quantity-quality trade-o¤s depend on the household composition and specialization in the household. Using the proposed estimator, we estimate a dynastic model that rationalizes these observed patterns. (JEL classi cation: C13, J13, J22, J62) 1
The labor force participation of women has increased substantially since the 1960s. At the same t... more The labor force participation of women has increased substantially since the 1960s. At the same time, the gender earnings gap has declined from about 40 percent in the late 1960s to less than 28 percent in the early 1990s and has stopped converging since.1 Much of the gender earnings gap is explained by gender differences in labor force attachment and accumulated labor market experience. In particular, the gender earnings gap increases with age as the experience gap increases.2 One explanation for the remaining gender earnings gap is that many jobs disproportionately reward working long hours.3 In many jobs, the pay is nonlinear in hours worked and penalizes workers who choose to work fewer hours. This reward structure tends to affect women of childbearing years disproportionately and also affects their occupational choices. Furthermore, in most occupations, the representation of women at the top-paying jobs is low—even if at lower levels there are many women.4 This article document...
This paper analyzes the sources of the racial difference in the intergenerational transmission of... more This paper analyzes the sources of the racial difference in the intergenerational transmission of human capital by developing and estimating a dynastic model of parental time and monetary inputs in early child-hood with endogenous fertility, home hours, labor supply, marriage, and divorce. It finds that the racial differences in the marriage matching patterns lead to racial differences in labor supply and home hours of couples. Although both the black-white labor market earnings and marriage market gaps are important sources of the black-white achievement gap, the assortative mating and divorce probabilities racial gaps accounts for a larger fraction of it.
We characterize how product market competition disciplines managers in a moral hazard setting. Co... more We characterize how product market competition disciplines managers in a moral hazard setting. Competition has two effects on a firm. First, the expected revenue or the marginal benefit of effort declines, leading to weakly lower effort. Second, the cost of inducing high effort increases (decreases) if competition increases (decreases) the probability of failure at a firm. Both effects imply a change in the optimal level of effort as competition increases. The manager in our model enjoys slack if he supplies low effort in equilibrium. We show that, if competition increases the probability of failure, managerial slack increases with competition. The relationship between managerial slack and firm value is ambiguous: Exogenous changes in the private benefit of low effort can affect slack without changing firm value, and vice versa. As a result, empirical tests that identify changes in slack may not capture the effect of competition on the level of slack. 1
This paper is an empirical study of the market for managers, more specifically the effects of age... more This paper is an empirical study of the market for managers, more specifically the effects of agency, human capital, and preferences on their promotion, tenure, turnover and compensation. From a large longitudinal data set compiled from observations on executives and their publicly listed firms, we construct a career hierarchy and report on its main features. Our summary results motivate a dynamic competitive equilibrium model, whose parameters we identify and estimate. Controlling for heterogeneity amongst firms, which differ by size and sector, and also managers, whose backgrounds vary by age, gender and education, our estimates are used to evaluate how important moral hazard and job experience are in jointly determining promotion rates, turnover and compensation.
This paper is an empirical study of the market for managers, more speci cally the e¤ects of agenc... more This paper is an empirical study of the market for managers, more speci cally the e¤ects of agency, human capital, and preferences on their promotion, tenure, turnover and compensation. From a large longitudinal data set compiled from observations on executives and their publicly listed rms, we construct a career hierarchy and report on its main features. Our summary results motivate a dynamic competitive equilibrium model, whose parameters we identify and estimate. Controlling for heterogeneity amongst rms, which di¤er by size and sector, and also managers, whose backgrounds vary by age, gender and education, our estimates are used to evaluate how important moral hazard and job experience are in jointly determining promotion rates, turnover and compensation. 1
The black-white pay gap increases substantially over the life-cycle. We document that white worke... more The black-white pay gap increases substantially over the life-cycle. We document that white workers are assigned initially to occupations with higher complex task requirements. The accumulated earnings gap grows from $30K after 5 years to $143K after 15 years. The growth in the total earrings gap are large even for workers with the same education and AFQT scores. During these years, the gap in the degree of task complexity grows substantially. To understand the source of these long run pay gaps and to analyze their link to occupational sorting and experience, we develop a dynamic Roy model of employment and occupation choice and learning which nests discrimination and accounts for the dynamic selection of workers into occupations over time. We then develop a two-step estimation method to recover the model’s structural parameters, and use them to simulate counterfactual exercises that allows us to decompose the different factors affecting these gaps. About 27% of the total pay gap af...
In this study, the gap is compared from one generation to the next. The changes in the wage gap a... more In this study, the gap is compared from one generation to the next. The changes in the wage gap are linked to changes in labor supply and to “statistical discrimination”—when women pay a price because many other women are less attached to the workforce than men are.
In this paper we developed and estimated a model of dynastic households in which altruistic indiv... more In this paper we developed and estimated a model of dynastic households in which altruistic individuals choose fertility, labor supply, and time investment in children sequentially, using data on two generations from the PSID. We then use the estimates to quantify the quality-quantity trade-offs and the return to parental time investment in children. We find that both fathers’and mothers’time investment increases children’s outcomes, however, the overall return to fathers’time investment is only 60% that of mothers’time investment. Despite the fact that the valuation function is higher for whites and the fact that conditional on education, blacks earn less than whites, on the margin, there are no significant race differences in the rate of returns to paternal time investment, and blacks have a higher return to maternal time investment than whites. Hence, the main reason for the lower parental time investment by blacks is the differences in family structure. There are a significantly...
The gender pay gap persists, even within occupations and even though women’s educational attainme... more The gender pay gap persists, even within occupations and even though women’s educational attainments are surpassing men’s. Is it because women tend to choose jobs with hours that are more irregular than those taken by men?
University of Economics and Technology. The views expressed are those of the individual authors a... more University of Economics and Technology. The views expressed are those of the individual authors and do not necessarily reect o ¢ cial positions of the Federal Reserve Bank of St. Louis, the Federal Reserve System, or the Board of Governors. This paper explores the estimation of a class of life-cycle discrete choice intergenerational models. It proposes a new semiparametric estimator. It shows that it is p N-consistent and asymptotically normally distributed. We compare our estimator with a modi ed version of the full solution maximum likelihood estimator (MLE) in a Monte Carlo study. Our estimator performs comparably to the MLE in a nite sample but greatly reduces the computational cost. The paper documents that the quantity-quality trade-o¤s depend on the household composition and specialization in the household. Using the proposed estimator, we estimate a dynastic model that rationalizes these observed patterns. (JEL classi cation: C13, J13, J22, J62) 1
The labor force participation of women has increased substantially since the 1960s. At the same t... more The labor force participation of women has increased substantially since the 1960s. At the same time, the gender earnings gap has declined from about 40 percent in the late 1960s to less than 28 percent in the early 1990s and has stopped converging since.1 Much of the gender earnings gap is explained by gender differences in labor force attachment and accumulated labor market experience. In particular, the gender earnings gap increases with age as the experience gap increases.2 One explanation for the remaining gender earnings gap is that many jobs disproportionately reward working long hours.3 In many jobs, the pay is nonlinear in hours worked and penalizes workers who choose to work fewer hours. This reward structure tends to affect women of childbearing years disproportionately and also affects their occupational choices. Furthermore, in most occupations, the representation of women at the top-paying jobs is low—even if at lower levels there are many women.4 This article document...
This paper analyzes the sources of the racial difference in the intergenerational transmission of... more This paper analyzes the sources of the racial difference in the intergenerational transmission of human capital by developing and estimating a dynastic model of parental time and monetary inputs in early child-hood with endogenous fertility, home hours, labor supply, marriage, and divorce. It finds that the racial differences in the marriage matching patterns lead to racial differences in labor supply and home hours of couples. Although both the black-white labor market earnings and marriage market gaps are important sources of the black-white achievement gap, the assortative mating and divorce probabilities racial gaps accounts for a larger fraction of it.
We characterize how product market competition disciplines managers in a moral hazard setting. Co... more We characterize how product market competition disciplines managers in a moral hazard setting. Competition has two effects on a firm. First, the expected revenue or the marginal benefit of effort declines, leading to weakly lower effort. Second, the cost of inducing high effort increases (decreases) if competition increases (decreases) the probability of failure at a firm. Both effects imply a change in the optimal level of effort as competition increases. The manager in our model enjoys slack if he supplies low effort in equilibrium. We show that, if competition increases the probability of failure, managerial slack increases with competition. The relationship between managerial slack and firm value is ambiguous: Exogenous changes in the private benefit of low effort can affect slack without changing firm value, and vice versa. As a result, empirical tests that identify changes in slack may not capture the effect of competition on the level of slack. 1
This paper is an empirical study of the market for managers, more specifically the effects of age... more This paper is an empirical study of the market for managers, more specifically the effects of agency, human capital, and preferences on their promotion, tenure, turnover and compensation. From a large longitudinal data set compiled from observations on executives and their publicly listed firms, we construct a career hierarchy and report on its main features. Our summary results motivate a dynamic competitive equilibrium model, whose parameters we identify and estimate. Controlling for heterogeneity amongst firms, which differ by size and sector, and also managers, whose backgrounds vary by age, gender and education, our estimates are used to evaluate how important moral hazard and job experience are in jointly determining promotion rates, turnover and compensation.
This paper is an empirical study of the market for managers, more speci cally the e¤ects of agenc... more This paper is an empirical study of the market for managers, more speci cally the e¤ects of agency, human capital, and preferences on their promotion, tenure, turnover and compensation. From a large longitudinal data set compiled from observations on executives and their publicly listed rms, we construct a career hierarchy and report on its main features. Our summary results motivate a dynamic competitive equilibrium model, whose parameters we identify and estimate. Controlling for heterogeneity amongst rms, which di¤er by size and sector, and also managers, whose backgrounds vary by age, gender and education, our estimates are used to evaluate how important moral hazard and job experience are in jointly determining promotion rates, turnover and compensation. 1
The black-white pay gap increases substantially over the life-cycle. We document that white worke... more The black-white pay gap increases substantially over the life-cycle. We document that white workers are assigned initially to occupations with higher complex task requirements. The accumulated earnings gap grows from $30K after 5 years to $143K after 15 years. The growth in the total earrings gap are large even for workers with the same education and AFQT scores. During these years, the gap in the degree of task complexity grows substantially. To understand the source of these long run pay gaps and to analyze their link to occupational sorting and experience, we develop a dynamic Roy model of employment and occupation choice and learning which nests discrimination and accounts for the dynamic selection of workers into occupations over time. We then develop a two-step estimation method to recover the model’s structural parameters, and use them to simulate counterfactual exercises that allows us to decompose the different factors affecting these gaps. About 27% of the total pay gap af...
In this study, the gap is compared from one generation to the next. The changes in the wage gap a... more In this study, the gap is compared from one generation to the next. The changes in the wage gap are linked to changes in labor supply and to “statistical discrimination”—when women pay a price because many other women are less attached to the workforce than men are.
In this paper we developed and estimated a model of dynastic households in which altruistic indiv... more In this paper we developed and estimated a model of dynastic households in which altruistic individuals choose fertility, labor supply, and time investment in children sequentially, using data on two generations from the PSID. We then use the estimates to quantify the quality-quantity trade-offs and the return to parental time investment in children. We find that both fathers’and mothers’time investment increases children’s outcomes, however, the overall return to fathers’time investment is only 60% that of mothers’time investment. Despite the fact that the valuation function is higher for whites and the fact that conditional on education, blacks earn less than whites, on the margin, there are no significant race differences in the rate of returns to paternal time investment, and blacks have a higher return to maternal time investment than whites. Hence, the main reason for the lower parental time investment by blacks is the differences in family structure. There are a significantly...
Uploads
Papers by limor golan