Skill-biased Technological Change, Fertility Choice and Gender Inequality

This paper develops a model to explain why the female-male earnings gap keeps narrowing in recent decades, despite the general trend of widening earnings inequality ever since the 80s among many developed countries. The model integrates the theory of skill-biased technological change (SBTC) with the theory of households ’ sexual division of labor and fertility choice into a unified framework to shed light on the wage inequality and employment patterns between the genders in the last two decades. Using a Mincerian earnings function, the model finds that the combined effects of SBTC on the education premium and the experience premium affect fertility choice, whereas the differential impacts of SBTC on the education premium and the experience premium determine the time allocation toward schooling and labor participation given fertility choice. Because the fertility choice affects female and male education attainment and average experience asymmetrically, gender gaps in education attainment and experience narrow, which contribute to the continued decline of gender earnings inequality. The model can also explain several other labor market patterns between the genders in the last two decades, including: the rise in female labor participation in the midst of slightly declining male labor participation and the narrowing of the gender gaps in schooling, experience and measured experience premium