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GENDER DISCRIMINATION ESTIMATION IN A SEARCH MODEL WITH MATCHING AND BARGAINING *
Author(s) -
Flabbi Luca
Publication year - 2010
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2010.00600.x
Subject(s) - economics , matching (statistics) , affirmative action , redistribution (election) , welfare , productivity , wage , prejudice (legal term) , labour economics , estimation , econometrics , psychology , social psychology , political science , law , statistics , mathematics , management , politics , market economy , macroeconomics
This article develops a search model of the labor market with matching, bargaining, and employers' taste discrimination in which—under necessary but standard distributional assumption—it is possible to separately identify gender discrimination and unobserved productivity differences. The equilibrium shows that both prejudiced and unprejudiced employers wage discriminate. Maximum likelihood estimates on CPS data indicate that half of the employers are prejudiced, average female productivity is 6.5% lower, and two‐third of the gender earning differential may be explained by prejudice. An affirmative action policy is implemented resulting in a redistribution of welfare from men to women at no cost for employers' welfare.