Selection on Ability and the Gender Wage Gap

Advisor: Rodrigo Reis Soares

Co-advisor: Gustavo Gonzaga

The literature generally emphasizes that female labor supply interruptions impact the gender wage gap through reduced work experience. We propose another mechanism: if women’s selection on ability is different from men’s, then interruptions would cause the gender gap to change over the life cycle. We use RAIS (a very large Brazilian employee-employer dataset) to assess this hypothesis, proceeding in two steps. First, we estimate Mincer equations controlling for worker fixed effects. Estimated fixed effects are then used to describe selection over the life cycle and to proxy for ability in gender-specific regressions of participation (various measures) on ability. Results suggest that selection on ability is more positive for men, providing an additional explanation for the early-career growth of the gender gap.