Workforce participation of low-skilled women, gender occupational segregation, and male-female earnings gap

We study the male-female earnings gap along the distribution of earnings by percentile. The analysis rests on the organization-based economy model introduced by Garicano and Rossi-Hansberg (2004, 2006). In this economy, agents choose to be self-employed or to produce in a team made up of one (high ability) manager and several (low ability) workers. Producing in a team boosts individual productivity but entails costs. We assume male workers' aversion to female managers. This translates into higher costs in teams where the manager is a female and workers are males. The direct consequence of this assumption is that labor market is gender-segregated. A second dimension of the analysis is that less skilled women workforce participation is low compared to that of male. This assumption affects the whole distribution of female earnings and occupational choice (worker, self- employed or manager). The paper helps understanding the "glass ceiling" phenomenon as well as the observed profile of male-female earnings differences along the distribution of earnings by percentile.