Research Economic Seminar: The Impact of Occupational Sorting on the Gender Pay Gap

The gender pay gap is a well-documented phenomenon, and while traditional explanations for it such as labor force participation and education levels have given way to new research on non-cognitive skills, gender norms and discrimination, observed differences in occupations still retain their explanatory power. This project seeks to understand the impact of differential sorting into occupations on the gender pay gap. By modeling the labor market using a matching model with imperfectly transferable utility, we identify three potential sorting mechanisms behind the gender pay gap: non-pecuniary returns to employment, imperfect substitution between pecuniary and non-pecuniary returns, and differential productivity based on non-cognitive skills. We structurally estimate our model on the Understanding Society dataset, which is a panel of about 10,000 individuals in the UK. We recover estimates for workers’ utility and firm production parameters, using observed matching and wages, and reservation utilities using unemployed workers’ observations.