Published in
IEW Working Paper no. 491, 2010, Institute for Empirical Research in Economics, University of Zurich
Abstract
This paper examines the evolution of women in the labor market, specifically their post-World War II employment, wages and education, by assessing the role of technology changing labor demand requirements, as a driving force. The empirical results in the United Sates data show that job requirements have shifted from more physical to more intellectual attributes. Moreover, women have always worked in occupations with relatively low physical requirements and, traditionally, also worked in occupations with lower intellectual requirements than men. However, the later trend has been reversed over time with women overtaking men in college education by the mid 1980s. This paper uses a model in which agents make work and education decisions to account for the importance of technological shifts in women’s labor market experience. The key feature of the model is that individuals are heterogenous in their innate brain and brawn abilities, and women have on average less brawn than men. This is the main source for the employment, wage and education gaps in the 1950s between men and women. The general equilibrium model is simulated to account for the quantitative implications of brain biased technical change (BBTC), which is modeled as a rise in the share parameter on the brain factor in a CES production function, from 1950 to 2005. In particular, as BBTC favors women’s comparative advantage in brain over brawn, the model is able to generate a large rise in female participation, closing gender wage and education gaps, in addition to a rising college premium. These results suggest that labor demand changes and multidimensional skill attributes are important in explaining the radical evolution of women’s labor market participation, wages and education.