Gender Gaps and the Rise of the Service Economy L. Rachel Ngai & Barbara Petrongolo American Economic Journal: Macroeconomics 2017 Presented by Francisco Javier Rodríguez for the Macro Reading Group Universidad Carlos III de Madrid January 30, 2018 Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 1 / 21
Introduction Research question What is the role of the rise in services in the narrowing of gender gaps in hours and wages in the last decades? Contributions One of the few papers to analyze the interaction between structural transformation, marketization and female work Endogenous explanation of the simultaneous narrowing of gender gaps in wages, market hours and home hours Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 2 / 21
Overview 1 I. Data and Stylized Facts 2 II. The Model 3 III. Quantitative Analysis Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 3 / 21
I. Data and Stylized Facts A. Market Work Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 4 / 21
I. Data and Stylized Facts A. Market Work Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 5 / 21
I. Data and Stylized Facts A. Market Work Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 6 / 21
I. Data and Stylized Facts B. Wages Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 7 / 21
I. Data and Stylized Facts C. Time Use Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 8 / 21
I. Data and Stylized Facts Summary: five main stylized facts 1 An increase in market hours for women, and a fall for men 2 A rise in the service share of market hours 3 An increase in female relative wages 4 A fall in home production hours for women, and an increase for men 5 A roughly constant gender ratio of total work Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 9 / 21
II. The Model The model A. Firms Technology: [ Y j = A j L j, L j = ξ j L η 1 η fj A j A j γ j, ξ s > ξ g, γ g > γ s + (1 ξ j ) L ] η η 1 η 1 η mj j = g, s B. Households Households consist of one man and one woman with joint utility: U (c g, c s, c h, L l ) = ln(c) + φ ln(l l ) Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 10 / 21
II. The Model B. Households Consumption: c = [ωc ɛ 1 ɛ g ɛ < 1, σ > 1 Home services: ] + (1 ω) c ɛ 1 ɛ ɛ 1 ɛ z ; c z = η 1 η c h = A h [ξ h Lfh + (1 ξ h ) L [ψc σ 1 σ s η 1 η mh ] + (1 ψ) c σ 1 σ σ 1 σ h ] η η 1, γs > γ h Leisure: [ L l = ξ l L η l 1 η l fl + (1 ξ l ) L η l 1 η l ml ] η l η l 1, η l < 1 Budet constraint: p g c g + p s c s = w m (L m L mh L ml ) + w f (L f L fh L fl ) Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 11 / 21
II. The Model C. Equilibrium A competitive equilibrium is defined by market wages (w f, w m ), market prices (p g, p s ), consumption (c g, c s ) and time allocation {L fj, L mj } j=g,s,h,l such that: i ii the representative firm maximizes profits, subject to technology and the representative household maximizes utility subject to its budget constraint given the optimal choices of firms and households, market wages and prices clear the market in each sector and the labor market for each gender: c j = Y j, j = g, s L ig + L is = L i L ih L il, i = f, m Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 12 / 21
II. The Model Forces at work Marketization force MF (σ 1) (γ s γ h ) > 0 Structural transformation force SF (1 ɛ) (γ g γ s ) > 0 Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 13 / 21
II. The Model Qualitative results Proposition 1: when women have a comparative advantage in services, a rise in the service share is associated with a higher wage ratio (at constant relative labor supply Mm M f ) Proposition 2: marketization and structural transformation expand the service share Proposition 3: when women have a comparative advantage in producing services, marketization and structural transformation raise the ratio of female to male market hours Proposition 4: when the wage ratio increases, relative female hours in home production fall more than in leisure time if and only if η > η l Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 14 / 21
III. Quantitative Analysis Quantitative Analysis Addition of gender-specific forces, by allowing ξ g and ξ s to evolve over time as follows: ξ j0 = π j χ j ; ξ jt = χ j ; j = g, s This drives the increase in within-sector female labor share that we saw in the motivation Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 15 / 21
III. Quantitative Analysis Parameters to estimate Elasticity parameters: σ, ɛ, η, η l Relative time endowment: L m /L f Leisure preference parameter: φ Sector specific productivity parameteres: γ s γ h, γ g γ s Gender specific parameters: χ g, χ s, ξ h, ξ l Wedge parameters: π g, π s  sh0 As A h ( ψ 1 ψ ) σ σ 1 ( ) ɛ and  gs0 As ω 1 ɛ A g 1 ω ψ σ σ 1 Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 16 / 21
III. Quantitative Analysis A. Data Targets Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 17 / 21
III. Quantitative Analysis B. Baseline Parameters Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 18 / 21
III. Quantitative Analysis C. Results Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 19 / 21
III. Quantitative Analysis C. Results Sensitivity Analysis Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 20 / 21
Sensitivity Analysis Results Ngai & Petrongolo Gender Gaps and Service Economy January 30, 2018 21 / 21