Gender wage gaps and risky vs. secure employment: An experimental analysis

In addition to discrimination, market power, and human capital, gender differences in risk preferences might also contribute to observed gender wage gaps. We conduct laboratory experiments in which subjects choose between a risky (in terms of exposure to unemployment) and a secure job after being assigned in early rounds to both types of jobs. Both jobs involve the same typing task. The risky job adds the element of a known probability that the typing opportunity will not be available in any given period. Subjects were informed of the exogenous risk premium being offered for the risky job. Women were more likely than men to select the secure job, and these job choices accounted for between 40% and 77% of the gender wage gap in the experiments. A method for classifying subjects according to risk preferences is derived from the theoretical framework and further demonstrates the higher incidence of risk aversion among women.We gratefully acknowledge helpful comments from Alberto Davila, Martin Dufwenberg, Jungmin Lee, Alston Mackenzie, Gary Solon, and from conference and seminar participants at the University of Arizona, Georgia State University, Kent State University, and the University of Paris I/Paris School of Economics. The authors would like to thank the Paris School of Economics for having funded this research. (Grant number: Fond de Recherche PSE 2014/2015-Dossier N4