| Abstract: |
We estimated two dynamic programing models, one for men and one for women, on
a sample of immigrants who arrived in Israel from the Former Soviet Union
(FSU) between 1989 and 1995. Following the literature, we assume that the
household maximizes its expected utility based only on the husband's human
capital. Therefore, the family's residential location decision is based on the
husband's labor market opportunities. We study the potential effect of this
assumed behavior on the labor market's gender gaps. In the model estimated for
men, we endogenize the decisions regarding residential location, employment
location, and occupational choices. In contrast, in the model estimated for
women the family's residential location is taken as given. Using the estimated
parameters from the two models and a number of counterfactual simulations, we
are able to decompose the observed gender wage gap into two parts–one based on
behavioral differences and the other based on the lower labor market returns
for women. The simulations indicate that if women had the same labor market
returns and the same preferences as men, their outcomes would have been
similar to those of men. Moreover, the simulations show that even without any
changes in their labor market conditions, women would have gained in terms of
both job quality and wages if the family's residential location was based on
their human capital. |