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Economics of the Rational Component of the Gender-Wage Gap

There is a large gap between the earnings of married women and married men, even if individuals of both sex have the same level of education.

Everyone knows there is sexual discrimination. Few people know, however, that certain aspects of Human Capital theory can explain over 38% of the gap. How so?

Explain in detail and give examples if appropriate. Cite academic literature (economists who have contributed to the theory).

Solution Preview

Becker (1992), Schultz (1989), and other authors theorize that there are several forms of wage-related human capital which may be developed "by doing". This is to say that, holding education constant, if a husband spends more time in the marketplace (which may be implied by the finding that wives spend more time in home production) then the husband would accrue experience, perhaps experience training, etc. If this is the case, then it human capital theory ...

Solution Summary

This solution goes into an in depth explanation of how human capital effects have been shown to systematically alter the market value of married women's market labor, holding education constant.